Chapter 15 bankruptcy is a newer type of bankruptcy filing that has only been around since 2005. It allows foreign companies access to the US bankruptcy court system in certain circumstances. This is part of the US’s compliance with international trade laws. Part of the aim of bankruptcy law is to preserve employment and protect investment. In an increasingly globalized economy it is understandable that the US could offer hearings to corporations which straddle national borders but are not based in the US. Continue reading...
Wealthy countries and non-government organizations frequently donate or lend resources to help the population of a country in dire economic need. This can come in the form of educational assistance, funds, materials, construction, food, medicine, and so on. On a macroeconomic scale, foreign aid constitutes one of the major forms of asset transfer between different parts of the world. Governments, charitable organizations, and NGOs donate or lend resources to countries that cannot supply their own needs effectively. Aid can be given altruistically, that is, just for the sake of doing good deeds, or it can be used as a tool for influence or personal gain, which is common. Continue reading...
Currency symbols are characters written or typed in a specific arrangement alongside the numerical values of a currency amount, to denote the kind of currency in which the amount of money is held. An example would be the dollar sign ($), which is placed at the beginning of the numbers which describe the amount of currency in question, despite the fact that in most languages the word “dollars” follows the numbers when spoken. Many currencies have their own symbol but not necessarily all do. Continue reading...
Currency baskets are composed of weighted amounts of certain currencies. The most common use of a currency basket is as a benchmark for certain economic analysis, but it can also be used as a unit of account where an international organization has constituents that use various currencies. A basket of currencies is a weighted index of various currencies which serves a specific purpose as a benchmark or as a unit of account. Continue reading...
ETFs are very popular and useful investment vehicles that offer affordable diversification and professional portfolio management. An ETF is a basket of securities that is designed to ‘mimic’ the performance of an index, sector, or category of securities. For example, the ETF with ticker SPY is designed to track the performance of the S&P 500, and the company that creates the ETF (in this case Barclays iShares) builds the ETF simply by purchasing the 500 stocks in the S&P 500. Investors can purchase shares of the ETF as a means of gaining instant access to all 500 stocks in the S&P 500, thus tracking its performance. Continue reading...
A budget is a plan for expenses that seeks to keep them within the limitations of revenue inflows so that a business or organization does not operate at a deficit. The Federal Budget is much larger and more complicated that most budgets, but it works similarly. Because the use of funds is such an important issue on such a large scale, there are several steps needed to create and enact a budget. A Federal Budget is created every year. It originates with a proposed budget from the President. The two houses of Congress go through significant deliberation in committees and on the floor, working on the Appropriations Bills. They then reconcile their budgets between the two houses and send it to the President for approval. Continue reading...
Federal debt is the money owed by the government. The primary source of this debt is Treasury Bonds (Notes), which constitute debt obligations. About 25% of the current national debt is owed internally between different government agencies, mostly to the Social Security Trust Funds. The Federal Debt is also, and perhaps more commonly, referred to as the National Debt. Currently the debt is approximately $19 Trillion. Continue reading...
Notional Value is used in futures, options, and forex markets to describe the total value of the principal of a contract or transaction, especially when either none or only part of that value has actually been exchanged. Notional value is used most often in interest rate swaps and futures contracts, and is "notional" because either no principal changed hands at the beginning of the contract (such as in an interest rate swap), or only a small payment was used to buy a larger position (such as in a futures contract). Continue reading...
Triple witching hour is when three types of derivatives expire at once, which happens once every quarter in the US. It typically results in irregular or volatile movements in the markets. When stock market index futures, stock market index options and stock options all expire at the same time, the hour before close is called the Triple Witching Hour. This occurs on the third Friday of March, June, September, and December in the United States between 3:00 PM and 4:00 PM Eastern time. Continue reading...
Options are contracts used by investors to take a speculative position – or a hedge – based on expected future price movements of the underlying securities. An option is a contract which can be exercised if the price of an underlying security moves favorably. An option will be written or sold short by one investor and bought by another. It will name the strike price at which the security can be bought or sold before the expiration of the contract. Continue reading...
A put option gives the owner of the option/contract the right to sell a stock at the strike price named in the contract. One kind of option is a put. A Put is a right to sell a particular asset (usually a stock) at a certain price (called the “strike price”) within a specified time-frame. The owner of the put contract doesn’t need to own the underlying stock. If the price of the stock drops below the strike price in the put, the owner of the put contract can buy the stock at the lower market price and immediately sell it at the higher strike price in the put contract. That is a speculative way to use a Put contract. Continue reading...
A call option is a type of contract that allows the holder of the contract to purchase an underlying stock at a specific price, even if the market price goes higher. A call option contract gives the owner of the contract the right to purchase a particular asset, which is typically a stock, at a strike price designated in the contract during a certain period of time. For example, if the stock of company ABC is trading at $100/share, you might purchase the right to buy it at $90/share for a $12/share premium. Continue reading...
Option strategies are implemented by investment professionals to profit from the price movement of an underlying strategy, and can also be used as a hedge against losses or to preserve profits. Various option strategies have been developed over the years to take advantage of the behavior of the underlying assets. Some of these are designed to be conservative, and others are intended to be aggressive. Sometimes these strategies are known by epic-sounding names such as Iron Butterfly and Iron Condor. Continue reading...
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...
Explore the multifaceted world of globalization in business. From economic benefits & global talent harnessing to cultural exchanges & governance, dive deep into its advantages, challenges, & historical roots. In a globalized era, understanding these nuances is key to success. 🌍📊 #GlobalBusinessTrends Continue reading...
Option prices are decided by the buyers and sellers in the marketplace, but are tied closely to the amount of risk inherent in the agreed upon expiration date and strike price. Option prices change as the market factors in the relevant information. The main factor is the strike price. The closer an option’s strike price is to the actual market price of a security, the higher it’s price will be. Once it’s in-the-money, it has inherent value that makes it essentially the same price as the market security that underlies it. The expiration date of the contract is also a factor because if the expiration date is closing in, and the strike price is not quite close enough to the market price of the underlying asset, there is little chance that the option will be useful. Continue reading...
An ‘expiration date’ refers to the time when an option contract must either be acted upon by the owner (buying or selling the security in question) or left to expire. With derivatives such as options and futures, there will be an expiry, or expiration date in the contract, after which they expire worthlessly. Most options contracts will expire in 3, 6 or 9 months from when they are generated, and they all share the same expiration day of the month on their contracts in the United States, which is the 3rd Friday of the month at 4 PM. Continue reading...
Options are contracts used by investors to take a speculative position – or a hedge – based on expected future price movements of the underlying securities. Many investors are scared when they heard the word "option" and perceive it as a risky, speculative investment. Options certainly can be risky, but they don’t have to be. In fact, certain options strategies are far more conservative than many available investments in the marketplace. Continue reading...
Taking a short position is selling a security that you don’t own because you anticipate that its value is set to fall. In simple terms, an investor that takes a short position is betting against it. “Shorting” is the opposite of being “long” in a security, where being “long” means to actually own it and to wait for it to appreciate. When you contact your broker or custodian to take a short position on a security, you essentially sell shares you don’t own, and then after a period, you have to return those shares to the custodian. Continue reading...
Ratio call spreads are options strategies where the investor combines purchased calls and short calls at the same expiration but with different strike prices. A Ratio Call Spread starts off as a delta-neutral strategy, which means that even if you have two long calls and one short call, the sensitivity of your overall position to move in the underlying is equal whether it moves up or down by small amounts. Continue reading...