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...
Professional investment advice is highly regulated, and all publications, seminars, correspondence and recommendations between professional advisors and clients must be kept on record and hold up to scrutiny. It is easy to mislead or misinform investors who have not had a chance to educate themselves, and their very livelihoods are at stake if their money is mishandled. Investment advice can be found at the local barber shop, bleachers, and beaches, but those who want to make sure their money is handled correctly will seek professional advice. Continue reading...
The Equity Multiplier is a number used to compare companies, arrived at by dividing total assets by owner’s equity, and it gives an idea of what proportion of the company’s assets have been financed through equity vs debt. In general a low Equity Multiplier is a good sign because it means that a higher proportion of equity has been used to acquire assets, as opposed to funding assets with debt. However, the absence of significant debt could mean that the company lacked the credit rating to issue debt or take out loans. Continue reading...
A mortgage is a debt instrument typically used as a finance mechanism to purchase real estate. When purchasing a piece of property or a home, new owners typically do not purchase the entire piece of real estate up front. As a mechanism to make a claim on the property while agreement to a set arrangements of payments to purchase it, a mortgage can be initiated. Over a period of several years, the borrower repays the loan, plus interest, until he/she eventually owns the property free and clear. Continue reading...
If a person buys a stock that pays a dividend on or after the ex-dividend date, where we understand “ex” to mean “after,” it means that the buyer would be buying the shares for the amount that still has a dividend (or some of it) priced-in, but the seller, not the buyer, will get to have the dividend, and the share price will go down immediately after the dividend is paid. Stock prices will tend to go up in anticipation of a dividend, and more so after the declaration date, which might be anywhere from two months to two weeks before the actual dividend is paid, when the company announces when a dividend is to be paid and how much it will be. Continue reading...
Dividend ETFs invest primarily in preferred stock and stocks that pay regular dividends. Strategically, they tend to be either Dividend Appreciation or High Yield. Dividend ETFs are equity dividend funds that seek income from preferred stocks, common stocks. As of 2016 there are over 130 Dividend ETFs, and that’s up from about 29 in 2011 and 45 in 2012. This has become a popular strategy, obviously, and they all seek to distinguish themselves from the pack. Continue reading...
When creating an index, it must be decided what criteria will affect the value of the index, and in the case of a price-weighted index, the only consideration is the price of shares. A price-weighted index is created by adding up the individual price per share of the companies included in the index and dividing by the number of companies. Essentially what you've done is arrived at the average price per share of the companies included in the index. Continue reading...
Blend mutual funds offer exposure to both growth stocks and value stocks. Blend mutual funds seek to capture the upside of growth stocks as well as the dividend yield of value stocks. P/E ratios can be used to identify a growth or value stock: where a P/E over about 25 is a growth stock and under about 15 is a value stock. Blend funds are generally considered a good core asset, but are not the same thing as a Core Fund. Continue reading...
Accommodation Trading is when two traders enter into a non-competitive trade agreement which disregards the current market price for the securities being traded. The primary reason to engage in accommodation trading is for an investor to avoid taxes by harvesting more losses than actually occurred. One investor will buy shares from another investor for a price significantly below the market value so that the selling investor can report more losses. The partners will typically agree to allow the selling party to buy the shares back later at the same price. Continue reading...
Fourier Analysis is a mathematical method of identifying and describing harmonic patterns in complex oscillating environments, and is used in options pricing among other things. Fourier Analysis is used to compute the probability that results will be within a certain range. Fourier analysis also has many other applications in physics, engineering, and music, for instance, because it can create a system for identifying patterns and simplifying computations for complex systems which feature oscillations and waves which have frequencies. Continue reading...