Investment Terms
An audio glossary of investment terms for young people and intending investors. Earn $SYBL as you listen by signin up on: https://tse.sybel.io/110927A6F4 Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.
Episodes
April 8, 2024 • 1 min
Economies of scale are cost advantages reaped by companies when production becomes efficient. Companies can achieve economies of scale by increasing production and lowering costs. This happens because costs are spread over a larger number of goods. Costs can be both fixed and variable.
The business size generally matters when it comes to economies of scale. The larger the business, the more the cost savings. Economies of scale can b...
The business size generally matters when it comes to economies of scale. The larger the business, the more the cost savings. Economies of scale can b...
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April 2, 2024 • 1 min
An attorney-in-fact, also called an agent, is a person who is authorized to act on behalf of another person, known as the principal, typically to perform business or other official transactions.
The principal usually designates someone as their attorney-in-fact by assigning them power of attorney, although a court may choose to assign it if the person being represented is incapacitated. The rules regulating power of attorney vary ...
The principal usually designates someone as their attorney-in-fact by assigning them power of attorney, although a court may choose to assign it if the person being represented is incapacitated. The rules regulating power of attorney vary ...
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March 25, 2024 • 1 min
The Bank Bill Swap Rate, or Bank Bill Swap Reference Rate, is a short-term interest rate used as a benchmark for the pricing of Australian dollar derivatives and securities—most notably, floating rate bonds.
The BBSW is an independent reference rate that's used for pricing securities. Fixed-income investors use BBSW since it's the benchmark to price floating-rate bonds and other securities.
There is a risk premium added to the BBSW...
The BBSW is an independent reference rate that's used for pricing securities. Fixed-income investors use BBSW since it's the benchmark to price floating-rate bonds and other securities.
There is a risk premium added to the BBSW...
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March 25, 2024 • 1 min
The Affordable Care Act (ACA) is the comprehensive healthcare reform signed into law by then-President Barack Obama in March 2010. Formally known as the Patient Protection and Affordable Care Act and commonly referred to as Obamacare, the law includes a list of healthcare policies intended to expand access to health insurance to millions of uninsured Americans.1
The law expanded Medicaid eligibility, created health insurance exchan...
The law expanded Medicaid eligibility, created health insurance exchan...
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March 18, 2024 • 1 min
Kiting is the fraudulent use of a financial instrument to obtain additional credit that is not authorized. Kiting encompasses two main types of fraud: Issuing or altering a check or bank draft, for which there are insufficient funds and Misrepresenting the value of a financial instrument to extend credit obligations or increase financial leverage.kiting typically involves passing a series of checks at two or more banking institutio...
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March 18, 2024 • 1 min
The term joint tenant with the right of survivorship (JTWROS) refers to a legal ownership structure involving two or more parties for any financial account or another asset. When one of the co-owners dies in a joint tenancy with the right of survivorship, then the surviving co-owner automatically owns the asset.
Each tenant has an equal right to the account's assets and is afforded survivorship rights if one of the account holder(s)...
Each tenant has an equal right to the account's assets and is afforded survivorship rights if one of the account holder(s)...
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March 11, 2024 • 1 min
A J Curve is an economic theory which states that, under certain assumptions, a country's trade deficit will initially worsen after the depreciation of its currency—mainly because in the near term higher prices on imports will have a greater impact on total nominal imports than the reduced volume of imports.
This results in a characteristic letter J shape when the nominal trade balance is charted as a line graph.
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This results in a characteristic letter J shape when the nominal trade balance is charted as a line graph.
Become a supporter o...
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March 11, 2024 • 1 min
A null hypothesis is a type of statistical hypothesis that proposes that no statistical significance exists in a set of given observations. Hypothesis testing is used to assess the credibility of a hypothesis by using sample data. Sometimes referred to simply as the "null," it is represented as H0.
The null hypothesis, also known as the conjecture, is used in quantitative analysis to test thA null hypothesis is a type of conjecture ...
The null hypothesis, also known as the conjecture, is used in quantitative analysis to test thA null hypothesis is a type of conjecture ...
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February 19, 2024 • 1 min
Hard skills are technical skills required for a job. They are learned abilities acquired and enhanced through education and experience. Hard skills are important for your resume, as employers look for them when hiring. Hard skills alone don’t translate into success, as employees also need other skills, such as soft skills. Unlike soft skills, hard skills can be quantified. For example, a hard skill might be proficiency in a second ...
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February 14, 2024 • 1 min
The Gini index, or Gini coefficient, measures income distribution across a population. Developed by Italian statistician Corrado Gini in 1912, it often serves as a gauge of economic inequality, measuring income distribution or, less commonly, wealth distribution among a population.
The coefficient ranges from 0 (or 0%) to 1 (or 100%), with 0 representing perfect equality and 1 representing perfect inequality. Values greater than 1 a...
The coefficient ranges from 0 (or 0%) to 1 (or 100%), with 0 representing perfect equality and 1 representing perfect inequality. Values greater than 1 a...
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February 12, 2024 • 1 min
A Giffen good is a low-income, non-luxury product that defies standard economic and consumer demand theory. Demand for Giffen goods rises when the price rises and falls when the price falls. In econometrics, this results in an upward-sloping demand curve, contrary to the fundamental laws of demand which create a downward-sloping demand curve.
The term "Giffen goods" was coined in the late 1800s, named after noted Scottish economist,...
The term "Giffen goods" was coined in the late 1800s, named after noted Scottish economist,...
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February 5, 2024 • 1 min
The Chartered Financial Analyst designation is regarded by most to be the key certification for investment professionals, especially in the areas of research and portfolio management. It is, however, just one of many designations used today. This can cause some confusion, as investors and professionals alike puzzle out what each designation means and which is best.
Professionals with the designation stand out to employers and may re...
Professionals with the designation stand out to employers and may re...
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January 29, 2024 • 1 min
An endowment is a donation of money or property to a nonprofit organization, which uses the resulting investment income for a specific purpose. An endowment can also refer to the total of a nonprofit institution’s investable assets, also known as its “principal” or “corpus,” which is meant to be used for operations or programs that are consistent with the wishes of the donor(s). Most endowments are designed to keep the principal am...
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January 29, 2024 • 1 min
Alpha is a term used in investing to describe an investment strategy's ability to beat the market, or its "edge." Alpha is thus also often referred to as “excess return” or the “abnormal rate of return” about a benchmark, when adjusted for risk. Alpha is often used in conjunction with beta , which measures the broad market's overall volatility or risk, known as systematic market risk.
Alpha is used in finance as a measure of perfor...
Alpha is used in finance as a measure of perfor...
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January 26, 2024 • 1 min
Berkshire Hathaway is a holding company for a multitude of businesses, including GEICO and Fruit of the Loom. It's run by chair and CEO Warren Buffett.
Berkshire Hathaway is headquartered in Omaha, Nebraska. Originally, it was a company comprised of a group of textile milling plants. Buffett assumed control of the struggling New England company in 1965.
Since that time, Berkshire has grown to be one of the largest companies in the w...
Berkshire Hathaway is headquartered in Omaha, Nebraska. Originally, it was a company comprised of a group of textile milling plants. Buffett assumed control of the struggling New England company in 1965.
Since that time, Berkshire has grown to be one of the largest companies in the w...
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January 17, 2024 • 1 min
Junk bonds are bonds that carry a higher risk of default than most bonds issued by corporations and governments. A bond is a debt or promises to pay investors interest payments along with the return of invested principal in exchange for buying the bond. Junk bonds represent bonds issued by companies that are financially struggling and have a high risk of defaulting or not paying their interest payments or repaying the principal to ...
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June 19, 2023 • 1 min
Creative destruction is the dismantling of long-standing practices in order to make way for innovation and is seen as a driving force of capitalism.
Creative destruction is most often used to describe disruptive technologies such as the railroads or, in our own time, the internet.
The term was coined in the early 1940s by economist Joseph Schumpeter, who observed real-life examples of creative destruction, such as Henry Ford’s asse...
Creative destruction is most often used to describe disruptive technologies such as the railroads or, in our own time, the internet.
The term was coined in the early 1940s by economist Joseph Schumpeter, who observed real-life examples of creative destruction, such as Henry Ford’s asse...
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June 12, 2023 • 1 min
Business cycles are a type of fluctuation found in the aggregate economic activity of a nation -- a cycle that consists of expansions occurring at about the same time in many economic activities, followed by similarly general contractions (recessions).
This sequence of changes is recurrent but not periodic.
Business cycles are comprised of concerted cyclical upswings and downswings in the broad measures of economic activity—output,...
This sequence of changes is recurrent but not periodic.
Business cycles are comprised of concerted cyclical upswings and downswings in the broad measures of economic activity—output,...
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June 2, 2023 • 1 min
An amalgamation is a combination of two or more companies into a new entity. Amalgamation is distinct from a merger because neither company involved survives as a legal entity. Instead, a completely new entity is formed to house the combined assets and liabilities of both companies.
The term amalgamation has generally fallen out of popular use in the United States, being replaced with the terms merger or consolidation even when a n...
The term amalgamation has generally fallen out of popular use in the United States, being replaced with the terms merger or consolidation even when a n...
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May 30, 2023 • 1 min
Adverse selection refers generally to a situation in which sellers have information that buyers do not have, or vice versa, about some aspect of product quality. In other words, it is a case where asymmetric information is exploited.
Asymmetric information, also called information failure, happens when one party to a transaction has greater material knowledge than the other party.
Typically, the more knowledgeable party is the sell...
Asymmetric information, also called information failure, happens when one party to a transaction has greater material knowledge than the other party.
Typically, the more knowledgeable party is the sell...
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