What is a put time spread?
A put time spread is an options strategy that has the investor implementing a short put and a long put at the same strike price, but with different expirations. Time spreads can also be called calendar spreads or horizontal spreads. A put time spread will use two put contracts on the same underlying security but with different expiration dates. One of the puts will be sold short, and one will be held long (this is the nature of spreads). Continue reading...
How Should I Invest Money in My IRA?
Generally, you should choose an allocation that makes sense for your situation. There are many ways you can choose to invest, but there is no definite answer. General rules focus on diversification of assets and strategies that change with age. Many brokerage companies will have questionnaires and model portfolios that can point you in the right direction. The principles you use to invest your IRA assets are no different from principles you use for any other investments: time horizon, risk tolerance, and your intentional use of the money will all help you arrive at strategies that will be appropriate for you. Continue reading...
What is a Dividends Received Deduction?
A Dividends Received Deduction (DRD) is a tax deduction available to corporations when they are paid dividends from another corporation. This is a provision to reduce the number of times an amount of earnings can be taxed: company A, which is paying the dividend, will have already been taxed on it, and the shareholders of company B will be taxed as well, so the Dividends Received Deduction alleviates taxes at the intermediary stage when Company B receives it. Continue reading...
What is the Symmetrical Triangle Top (Bullish) Pattern?
The Symmetrical Triangle Top pattern forms when the price of a security fails to retest a high or low and ultimately forms two narrowing trend lines. The price is expected to move up or down past the triangle depending on which line is broken first. The price movement inside the triangle should fill the shape with some uniformity, without leaving large blank areas. This pattern is commonly associated with directionless markets since the contraction (narrowing) of the market range signals that neither bulls nor bears are in control. However, there is a distinct possibility that market participants will either pour in or sell out, and the price can move up or down with big volumes (leading up to the breakout). Continue reading...
How Will Ethereum Scale?
With cryptocurrencies, there is always a question of how the blockchain will scale as technology changes and the currency grows in demand. Blockchains are meant to be immutable, meaning that once a change has been made to it, such as the data for a particular transaction, the record of the transaction cannot be changed or forgotten. This means that, for one thing, the distributed ledger that holds the record of all the transactions will inevitably get larger and larger, and any computer that wishes to be a node may have to download a potential cumbersome file with all that data. Continue reading...
What are Accounts Payable?
On a balance sheet, Accounts Payable is a section under ‘Liabilities’ that details the obligations the company has to pay off short-term debts. Goods and services rendered to a company by suppliers, banks, utilities, and so forth will need to be paid for in the short term, and these bills are accounted for in the Accounts Payable. In a Company's Balance Sheet, the Payables will appear in the Current Liabilities section, and these tend to have cycles of 30-90 days in which they should be paid. Continue reading...
What is Discounted Cash Flow?
Discounted Cash Flow (DCF) uses an estimated future cash flow amount and a Discount Rate to determine the Present Value (PV). An investor or business executive might project an estimated future cash flow for a business based on recent growth rates, industry information, futurism, estimated inflation, etc. The most common future cash flow to use is free cash flow, which takes out capital expenditures. Continue reading...
What is Monetary Policy?
Monetary policy is the stance of the central bank at any given time regarding the tightening or loosening of rates, or the issuance of new currency denominations, that will affect the money supply in the country. Monetary policy is the prerogative of the central bank but may be influenced by congress as well as private banking institutions and the central banks of other countries. The goal of monetary policy is to keep the Federal Funds Rate or the LIBOR, or whatever it might be depending on the country, at just the right level to keep the economy going in the direction that will be most helpful. Continue reading...
What is foreign debt?
Foreign Debt is also called International Debt or External debt. It is the amount of debt that is owed by one country to other countries or entities outside of the borrowing country’s borders. A country may find it easy to raise capital for operations and projects by issuing lots of bonds and taking on lots of debt obligations. If this proves to be unsustainable, or if the sheer amount of debt has investors worried, it can have significant detrimental effects and send an economy spiraling out of control. Continue reading...
What is an Expense Ratio?
Generally associated with mutual funds and exchange traded funds, the expense ratio represents the total annual management fee. The expense ratio is the annual management fee charged to shareholders by ETFs and mutual funds. The annual fee typically comprises the annual management fee, 12b-1 fees (which are associated with research costs), operating costs, and all other administrative type fees that go into the product. The expense ratio encompasses all of these fees as one percentage. Continue reading...