Investing Terms

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  • Financial Planner Versus Financial Advisor

    Achieving one's corporate or personal monetary goals takes strategy, discipline and dedication. In order to craft a robust gameplan designed for the long-haul, many people commission the help of an independent third party for guidance. Of these entities, there are two primary types: financial planners and financial advisors. There is no one-size-fits-all money management service. They come in various forms, each with specific qualifications and specialities. However, through the performance…

  • A Guide To Fintech Companies

    What Are Fintechs? "Fintech," which is short for "financial technology," refers to companies that have infiltrated the financial services industry. Typically, they offer electronic banking, investments, payment and budgeting services and products to consumers and businesses through the internet and mobile phones, and not through traditional brick-and-mortar branches. Fintechs that offer banking products such as checking and savings accounts and debit and credit cards are also called "challenger" banks, particularly…

  • Special Purpose Acquisition Company (SPAC)

    What Is A SPAC? A special purpose acquisition company (SPAC) is a shell company that raises money in an initial public offering (IPO) with the purpose of eventually buying an as-yet-to-be-determined private company. Essentially, investors provide money to the sponsors of the SPAC so that they can quickly acquire a company they believe is a good investment. SPACs are often called "blank check" companies because investors really don't know what…

  • Zero Coupon Bond

    What Is A Zero Coupon Bond? Zero coupon bonds are bonds that pay no interest at regular intervals like traditional bonds do. Rather, zeros are sold at a deep discount to their maturity or face value. As the bonds get closer to their face value over time, they accumulate interest, and the investor receives the full face amount at maturity. For example, a zero coupon bond with a face value…

  • Write Down

    What Is A Write Down? A write down (also written as "writedown") is an accounting procedure in which a company reduces the value of an asset on its balance sheet to reflect its current, lower market value. A write down is also included on the company's income statement as an expense, which reduces its operating income. Write downs occur in all types of companies, although they may occur more often…

  • Loan Loss Provision

    What Is A Loan Loss Provision? A loan loss provision is an amount of money a bank charges to its expenses on its income statement in anticipation that some of the loans it made will default. As a result, loan loss provisions reduce the bank's operating income. In 2020, loan loss provisions have been much in the news as many of the world's banks have announced major loan loss provisions…

  • Junk Bonds

    What Is A Junk Bond? Junk bonds are debt securities issued by corporations with poor credit ratings, which means they yield more than investment-grade bonds because of their greater risk of default. Junk bonds are also known as high-yield or non-investment-grade bonds. Junk bonds are generally classified as having credit ratings below Baa by Moody's Investors Services and BBB by S&P Global Ratings and Fitch Ratings, the three main credit…

  • Yield Spread

    What Is Yield Spread? The yield spread is the difference in yield between two different bonds. Investors use the yield spread to measure the relative value of two different securities, particularly as it pertains to credit quality but also to liquidity and supply, which can influence bond prices and yields. Yield spread is measured in basis points. Most commonly, yield spread is measured against a benchmark, usually the yield on…

  • Annuities

    What Are Annuities? An annuity is a contract in which an insurance company agrees to pay out a guaranteed sum of money to an investor, called the annuitant, for a specified period. The investor hands over a sum of money, either in a lump sum or over a period of time, to the insurance company, which agrees to make payments, usually monthly or quarterly, to the investor. Payout periods can…

  • How Does Civil Unrest Impact The Forex?

    Over the course of human history, certain periods of time have proven especially tumultuous. Racial divides, famine, pandemic and political upheaval all pose unique challenges. In some cases, these events stimulate extreme social conflict. From the late-18th century French Revolution to the end of South African aparthied 200 years later, civil unrest has been a disrupter of financial markets, economic systems and the global currency exchange. Although the forex is…

  • Haircut

    What Is A Haircut? A haircut in finance has several meanings. It most commonly refers to the reduced value of a financial asset for purposes of calculating capital requirements, a lending margin or collateral level. It also refers to a loss an investor may have to take or accept on an asset. It means the difference between the bid and asked price of an asset as well, with that difference…

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