Shares

What Is Return On Assets (ROA)? Return on assets (ROA) is an important measurement of a company's profitability. Usually stated as a percentage, ROA measures net income divided by the company's total assets. Derived from the company's balance sheet, assets include cash and cash-equivalent items, receivables, inventories, land, and buildings and equipment. They also include intangible assets such as intellectual property, copyrights and patents, the estimated value of brand and…

What Are Real Estate Investment Trusts (REITs)? Real estate investment trusts, or REITs (pronounced "reetz"), are funds that own, develop and manage income-producing properties in a range of real estate sectors, including shopping malls, offices and commercial buildings, residential apartments and health care facilities. Some of these trusts also invest in mortgages and other property loans. Basically, REITs collect rent from the tenants of these properties and distribute the income…

What Is A Cash Flow Statement? A cash flow statement, also known as a statement of cash flow, is one of the main financial statements, along with the income statement and the balance sheet, that companies are required by securities regulators to prepare to demonstrate their financial condition. The cash flow statement is important because it shows investors and creditors how well a company manages its cash and that it…

What Is Value Investing? Value investing is an investment strategy in which the investor seeks to profit by buying stocks they believe are underpriced or undervalued by the market at large. The investor looks to buy stocks when they believe they are "on sale," just as they would buy a box of cereal at the supermarket when it's on sale rather than paying full price. The idea of value investing…

What Is Secured Overnight Financing Rate (SOFR)? The Secured Overnight Financing Rate (SOFR) is an interest rate benchmark chosen by the Alternative Reference Rates Committee (ARRC) in 2017 as an alternative and eventual replacement for the London Interbank Offered Rate, more commonly known as Libor, which is slated to be phased out by 2021. ARRC is a committee set up by the U.S. Federal Reserve Board and the Federal Reserve…

What Are Systemically Important Financial Institutions (SIFIs)? Systemically Important Financial Institutions, or SIFIs, are a group of 29 large international banks that are required to hold extra equity capital against losses because of their size, complexity and importance to the international financial system. These institutions are generally regarded as "too big to fail," meaning they would require being bailed out by taxpayers if they were threatened with failure during a…

What Is A Safe Haven Asset? Safe haven assets are investments that investors turn to during times of market volatility and instability, i.e., to "weather the storm." These investments are perceived to be safe from losses during market turmoil or are negatively correlated to the market at large, meaning they may go up in price when the majority of other assets, mainly stocks, are losing value. Most Common Safe Haven…

What Is Short Covering? Short covering is the act of closing out a short position in a security. Investors who believe that a stock, bond or commodity is overvalued and is likely to decline in price can try to profit on that belief by selling short that particular asset. In a short sale, the investor borrows the security from their broker and immediately sells it. At some point the investor…

What Is Short Interest? Short interest is the number of shares of a stock that have been sold short by investors but have not yet been paid back. Investors who believe a stock is overpriced and headed for a fall can short a stock by borrowing shares from their broker and then selling them, the proceeds of which go into their account. At some point they have to buy the…

What Is A Short Squeeze? A short squeeze is what happens when many investors with a short position in the same security—meaning they are betting that the price will drop—are forced to cover their positions and buy the security back when the price rises unexpectedly. The resulting demand usually forces the price to rise even higher, exacerbating the situation and the potential losses for short sellers. Investors who believe a…

For a vast majority of the English-speaking world, the terms shares and stocks are used to describe a corporate equity offering. Each is commonly viewed as being synonymous with the other, referring to a portion of a company's pledged debt obligations. Despite the perceived similarities between shares and stocks, there are some key differences. Working definitions, usage and practical applications are three areas where the functionality of one term is…