Questions tagged [financial-literacy]

for questions related to understanding basic concepts in finance or certain terms in a particular context

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2answers
1k views

How to read bond yield quotes? What do the time, coupon, price, yield, and time mean?

I am newbie in finance and I recently saw Bloomberg bond yields quoted as follows: Can anyone specify what "1 month" and "1 year" mean? What do coupon, price, yield and time (EDT) mean?
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3answers
264 views

Why did prices of Treasury securities go up when US lost its AAA credit rating in 2011?

When the credit rating of a fixed-income security is cut, this means the security has higher default risk. What follows is that the price will go down. However, the opposite happened in 2011 to US ...
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3answers
526 views

First Home Purchase - Understanding Closing Costs

My loan officer earlier gave me an estimate of $11,485 towards closing cost, now when I applied for loan I see the estimate going up to $17,110. For example the Origination Fee Charge increased/...
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1answer
229 views

How does a CFD work behind the scenes?

I'm curious as to how the Contracts For Difference (CFDs) work. I understand how they work for the consumer side - you enter into an agreement to pay/be paid the difference between the stock price at ...
5
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1answer
114 views

How to Transition From Employee to Employer?

I know Making the transition from employee to employer requires financial stability, a good business plan, self-confidence and a lot of discipline. But i am looking for some instructions/tips from ...
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1answer
221 views

What are the mechanics of tracking stock?

I'm curious about tracking stock. Take, for example, NASDAQ:DVMT. It's a tracking stock issued by Dell for VMWare (NASDAQ:VMW), which is partly owned by Dell. The idea is that people could invest in ...
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4answers
12k views

What are some examples of unsecured loans

I am writing an essay on unsecured loans and am now trying to find some examples, so that I may then talk about the pros and cons for each example. I have already mentioned credit cards and an ...
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3answers
2k views

Why and why would/wouldn't a company split their stock?

When Apple was in the high $600 or so range, it split 6 times and made it more affordable to purchase more shares for less, even though the value was technically the same. I see companies like Google ...
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7answers
3k views

What is the opposite of a sunk cost? A “sunk gain”?

Here's an example of the sunk cost fallacy: You decided to buy a solar panel because you heard that you can make money from them over time. Unfortunately, you didn't do enough research and bought an ...
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6answers
383 views

How to acquire skills required for long-term investing?

Imagine I want to buy shares of companies and hold them for a long time. Ideally, the valuation of these companies and/or the dividends they pay will increase over time. I asked a friend what skills ...
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3answers
295 views

Do mutual fund companies deliberately “censor” their portfolios/funds?

In Survivorship Bias, David McRaney writes: In finance, this is a common pitfall. The economist Mark Klinedinst explained to me that mutual funds, companies that offer stock portfolios, ...
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4answers
739 views

Basic questions about investing in stocks

I've had some questions regarding stocks that have been bothering me for a while. They are naive, but that is the whole point: to understand what they are and fix my misconceptions. What is a stock? ...
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4answers
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How much of each stock do index funds hold?

An S&P500 index fund will hold each of the 500 stocks that are in the S&P 500. Does it target holding an equal number of shares of each stock? An equal dollar amount? Does this vary based on ...
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2answers
705 views

Why are cash advance limits lower than my credit limit?

All my credit cards allow for cash advances. But for some reason the limit for cash advances are always way lower than my actual credit limit, why is this? If a bank trusts me with credit to purchase ...
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4answers
376 views

What is good growth?

I want to start rolling rental income into the stock market more. I already max my company 401(k) so I don't mind something that isn't tax deferred. Up to this point I have been saving $5k and then ...
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4answers
2k views

Is the blockchain similar to double-entry book-keeping?

As far as I know, blockchains keeps transaction records from the beginning of time. This lets the blockchain retain a history of traceable transactions so it can maintain validity. Double-entry book-...
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2answers
417 views

Understanding Credit Card Repayments and Usage

I tried reading related questions, but I can't seem to digest how credit cards really works. Here is the scenario: Credit limit: 15,000. Statement: Period: (24-Nov-2016 to 23-Dec-2016): 9000 full ...
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3answers
414 views

Why hedge when one can simply reduce the position size?

Often, I would read about traders/investors hedging their position in case things do not go their way. I find this strange. If one were unsure, then wouldn't it be better to simply reduce the position ...
4
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2answers
261 views

How can I determine if leaving a lower paying, tax advantaged, job for a higher paying one makes sense financially?

I'm not exactly sure how to go about calculating this problem. I'm a Canadian (Alberta) working in a ministry position at a church. My credentials qualify me for clergy housing, and I make just shy ...
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2answers
378 views

What is a mutual fund?

From Investopedia I understand that a mutual fund is a pool of funds used to invest in various assets. I am struggling to understand what it is. I wouldn't be able to spot a mutual fund based on this ...
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1answer
11k views

What does it mean to borrow short and lend long?

What does it mean that institution borrowed short and lent long?it would be great if u may use a comprehensive example. Thank you very much.
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2answers
152 views

From the book of Benjamin Grahm “The Inteligent Investor” : chapter 5, pg 115, what does he mean imposing some limit

I am totally new to finance and investing world, hence please bear my basic question. I have a query on Ben's book The intelligent investor Page #115. point #4 it says : The Investor should impose ...
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1answer
647 views

What happens to my stock when a company I invested in gets bought by another company?

If a company is bought by another company, does my stock rollover to the new company when it is combined with the new parent company?
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1answer
477 views

Why do passive ETFs require so much trading (and incur costs)?

As far as I've understood, the idea of passive ETFs is to track an index. Typically, the index is a value-weighted stock market index, such as the S&P500. Now, if I'm not mistaken, tracking a ...
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1answer
2k views

What do the suffixes on stock symbols indicate

For example, this article mentions symbols VZ.N, CVC.N, TWC.N, and CCOI.O. Are these related to share classes and/or warrants? Each of these symbols also seem to exist and can be referenced without ...
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2answers
2k views

Why are there hidden bids and offers in the US stock market for the more illiquid stocks?

I have noticed one unusual characteristic in the US market. There are hidden bids and offers in the US stock market and this affects mainly the more illiquid small-cap stocks. Say, Stock ABC has a bid ...
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3answers
2k views

Calculate time to reach investment goals given starting balance?

I'm sure this has already been asked, but I've had difficulty finding the answer by searching. Most investment formulas I've found explained don't include a starting balance. Given payment size, ...
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1answer
156 views

Can a non dividend-paying product (say ETF) suddenly start paying dividends?

If I buy shares of a product that currently does not pay dividends, can it theoretically/technically start paying dividends in the future?
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5answers
307 views

How should I think about stock dividends?

I'm a 19 year old college student looking at some potential long-term investments, but am first reading as many books as I can, since this sector isn't the field I study. I am reading a book and a ...
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1answer
126 views

Money on the table: Lorillard (LO)?

Lorillard (LO) / Reynolds acquisition news was announced today. Reynolds will buy LO for 68.88 per share. However, the stock dropped today to ~ $60.17. The out of the money call options also reflect ...
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3answers
2k views

What's the correct formula to calculate my monthly wage (deducting UK Income Tax and National Insurance)?

For a given salary, how do I work out what would be paid into my bank each month? The Income Tax part is explained for the main part in this question, but I can't make sense of the National Insurance ...
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1answer
251 views

What shares are actually being sold in “ATM” format release?

I recently invested in $HMNY, a listed company and the owner of MoviePass. I invested it simply because that I love the MoviePass idea. Then, rumors says that the company wouldn't last long for the ...
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2answers
14k views

How do dividends of the underlying security in a security futures contract affect the security futures price?

I would assume that increases in any dividends would increase the price of the underlying security, therefore causing a relative increase to the security future price. Or is this relationship more ...
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1answer
829 views

What is the difference between net profit and net banking income

For Societe Generale Analysts had expected net profit of €811.5m on net banking income of €6.47bn. Why are they so different?
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1answer
101 views

Chained CPI and new tax bill

This morning I heard about how the new tax bill will be using "chained CPI" calculations instead of the traditional CPI calculations, and people seemed to be pretty upset about it. What is "chained ...
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1answer
16k views

Why bonds with lower coupon rates have higher interest rate risk?

According to the following article: Bonds offering lower coupon rates generally will have higher interest rate risk than similar bonds that offer higher coupon rates. And: For example, ...
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2answers
971 views

How are stocks in an IPO allocated to investors

Example: the VRL Logistics IPO was subscribed 74x, how is it decided who gets shares and who doesnt? This is assuming the number of those who applied at the highest price point is still greater than ...
4
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2answers
129 views

Stocks and bonds have yields, but what is a yield?

I often read about yield such as in this article from Kiplinger, but I have not been able to find a good description of what a yield is. What is it, and why would I care as a novice investor?
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1answer
100 views

When is Retained Earnings considered equivalent to issued common stock?

The below reference states: "As long as management is presumed to be acting in the best interests of the stockholders, retained earnings can be regarded as equivalent to a fully subscribed, pre-...
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1answer
312 views

Mathematical proof for justification of interpretation of negative IRR

What would the mathematical proof look like of the interpretation of negative internal rate of return shown here look like which says that "Negative IRR indicates that the sum of post-investment cash ...
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2answers
490 views

After Hours S&P 500

I know that while major stock markets are closed, many instruments continue trading overnight. I imagine that some of these instruments track the S&P 500. Is there some easy way to follow these? ...
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1answer
1k views

What are the ways compounding can occur from an investment in stocks and bonds?

I've been trying to understand the multiple ways stocks and bonds compound (under the definition of compounding as generating earnings from the reinvestment of previous earnings, my understanding of ...
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2answers
3k views

How do hidden orders affect bid/ask price?

I am little confused on basic bid-ask concepts. Let's suppose I have a BUY order i.e I want to buy shares. I can either place the order at BID price, lower than BID price or higher than bid price....
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2answers
5k views

401k Hardship withdrawal (First home), without buying home?

Not saying this is a good idea, but honestly it was something I was just curious about. My and other 401(k) plans allows you to withdraw from your 401(k) before 59 years of age for "hardship" for the ...
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1answer
875 views

What is the difference between an Independent Financial Advisor (IFA) and an Accountant?

I'm looking for some advice on various small personal financial matters relating to pension, salary, taxation etc. I've been given a personal recommendation for an accountant, but looking at their ...
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1answer
288 views

Can I get a dumbed down explanation of risk measures used for evaluating stocks?

Hoping this will be a good reference question for the site. Can someone explain in a way that doesn't require a lot of math/statistics background what the following terms mean when analyzing the ...
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1answer
156 views

what does “private equity structures” mean?

I'm translating an article about finance. What does "private equity structures" mean in this context - He said that popular ways for UHNWs to invest in real estate included property club deals ...
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3answers
359 views

What is a good service that will allow me to practice options trading with a pretend-money account? [closed]

I want to get a little more practice before I put my money on the line. I was using Paper Money from thinkorswim through school, but my account is bugged where the buying power will not update. The ...
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3answers
183 views

Are quarterly earnings released first via a press release on the investor website, via conference call, or does it vary by company?

Are quarterly earnings released first via a press release on the investor website, via conference call, or does it vary by company?
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Is it possible to influence a company's actions by buying stock?

I have a question about shareholder activism. Since the Dakota Access Pipeline has major support by the general population, would it not be possible to buy their stocks, bring down the price of the ...

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