What is a Blue-Chip Stock?
A blue-chip stock generally refers to a publicly traded company that is very well-established and is in the top tier of market capitalization, usually in the tens of billions. There is no formal definition for what makes a company a blue-chip stock, but the general category includes some of the biggest and most household names available to trade. Companies like Johnson & Johnson, Walmart, Visa, Dow Chemical, and so on, that have been around for decades and have market capitalizations in the tens of billions. (click on the link for each company to see their current stock price) Continue reading...
What is a Home, Legally-Speaking?
The laws concerning a legal residence or primary residence may come into play for purposes of insurance, state taxes, and business matters. Some people have secondary residences, some people choose to remain legal residents of one state while they inhabit another. It can be quite complicated and various statutes may apply, depending on the situation. It can matter for a mortgage loan, for local voting, for healthcare and for business: what is a home? Continue reading...
What is the Homeowners Protection Act (HPA)?
The HPA was enacted to protect consumers from the unscrupulous practices of some private mortgage insurance companies, which were not informing consumers of the consumer’s right to cancel their mortgage insurance at least by the time the individual had paid off 80% of their home. Consumers may be required to pay for private mortgage insurance to protect the lending institution if the borrower makes an initial payment of less than 20% of the value of the home. By law, lenders cannot require borrowers to have PMI after 80% of the original value of the mortgage has been paid off. Continue reading...
What is an Investment Center?
An investment center is an almost autonomous division of a company whose purpose is to generate returns on invested money. Cost center and profit center are terms used for various kinds of business divisions when observed from a solely financial, instead of operational, standpoint. These categories help a business to identify and group its similar assets for evaluation. A cost center can be turned into a profit center if it manages to reduce costs enough to generate a profit. Continue reading...
How Do Ethereum Smart Contracts Work?
Ethereum smart contracts are an essential part of the Ethereum blockchain that can be coded into financial transactions or decentralized applications. Smart contracts were first described in 1998 by Nick Szabo, but they did not really make their debut until being popularized by the Ethereum platform in 2015. Bitcoin even has protocols in its code to facilitate smart contracts, but Ethereum, because it is a platform for the development of decentralized applications, instead of just a medium for currency like Bitcoin, has gotten all the glory. Continue reading...
What is a Buying Hedge?
Hedging against future price risk was the main reason Futures contracts came into being. If an investor or a business knows that they need to acquire an asset or security at a future date, they might go ahead and agree to a price and have it in writing on a Futures contract. A futures contract means that an item has been sold at a stated price, and only awaits settlement at a future date. This will protect them from the risk that the price will move unfavorably in the future, and it will allow them to balance books and plan a budget with more certainty. Futures contracts are standardized and traded on exchanges. Continue reading...
What is an Asset-Backed Security?
Asset-backed securities are bonds or notes that come in several forms, but they typically use the cash flows from debt repayment as the asset that backs them. The assets that back the bonds called asset-backed securities (ABS) can be basically anything with a fairly predictable cash flow, but debt repayment cash flows tend to be used the most. These include credit card debt, home equity loans, auto loans, student loans, and so forth. Continue reading...
What is the Federal Energy Regulatory Commission?
The FERC oversees the interstate commerce surrounding oil, energy, and natural gas. This regulation and oversight might deal with pipelines and storage facilities, permits for future exploration sites, environmental and safety concerns with projects, as well as the sale and transfer of these commodities. FERC deals with the companies engaged in the extraction, transfer, storage, and sale of energy and energy-related resources. Continue reading...
What is an FHA Loan?
The Federal Housing Act of 1934 sought to make it easier for Americans to buy homes. It was believed and still is today to an extent that homeownership is a positive foundation for a healthy economy because it provides stability to communities, facilitating healthy family life, community involvement, and the development of businesses in an area where a community will support the business. The Federal Housing Administration runs the FHA loan program with the help of certified lending institutions. FHA loans are a way for lower income earners to be able to purchase a home. Continue reading...
How often do I need to rebalance my portfolio?
There are different methods and theories about rebalancing, and the answer is basically “it depends.” There is no set rule for the frequency of rebalancing your portfolio, and any generic rules that exist do not necessarily apply to or predict the performance of your particular portfolio. If you’re not very familiar with it, rebalancing is the redistribution of gains from the winning areas of your portfolio to the other areas. Continue reading...