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What is Duration?
Duration refers to the amount of time before a fixed income product will return the investment (principal and interest) to the investor. The bigger the duration number, the greater the interest-rate risk or reward for bond prices. For example, an investor should generally expect to receive better interest from a 30-year duration bond versus a 10-year, since the investor has to hold the note for longer to receive all interest payments and principal. Continue reading...
What is the Ladder Strategy for Structuring My Bond Portfolio?
The ladder provides the bondholder with a degree of freedom and some liquidity to take part in possibly improved interest rates in the future. The ladder strategy distributes your funds uniformly among bonds with various durations. For example, if you have $10,000, you buy one bond with a duration of one year, one bond with a duration of two years, etc. If the interest rates go up when the shorter-duration bonds expire, you will be able to reinvest this money with a higher coupon rate (of course, keep in mind that your longer-duration bonds would have fallen in price). Continue reading...
What is the Barbell Strategy for Structuring my Bond Portfolio?
A barbell strategy avoids intermediate-term bonds and equally invests in very short term and very long term durations. The barbell strategy divides a sum, for instance $10,000, equally among bonds with short durations and bonds with long durations. If the interest rates will go up sharply, the proceeds from your short-duration bonds will be reinvested into new bonds with much higher coupons. If the interest rates drop sharply, the proceeds from the bonds with shorter durations will be reinvested at a much lower coupon, but on the other hand, your long-duration bonds will rise sharply in price. Continue reading...
What are currency warrants?
Currency warrants are relatively new to the international Forex market. They function like puts or calls, depending on whether it is a purchase warrant or a warrant to sell, but they have longer durations, usually between one and five years until they expire. They can be purchased to take a position on a currency index or on a currency pair. Warrants were originally issued by corporations, giving investors the ability to redeem the warrant like a call option to purchase a stock at a strike price. Continue reading...
What is a Yield Curve?
A yield curve is an illustration of the current duration-to-yield relationship for bonds of the same credit rating but different durations. As a general rule, the longer the duration of the loan, the more risk you take on (since you don't know what might happen with that corporation in the future), and therefore, you demand a higher reward (i.e., higher coupon). The yield curve for any bond (not just the US Treasury Bonds) changes daily based on many economic and market factors. Continue reading...
What sets apart drawdown in banking from drawdown in trading?
Explore the differences between Drawdown in Banking and Drawdown in Trading in our insightful analysis. Banking drawdown focuses on optimizing credit utilization for efficiency and control. In contrast, Trading drawdown assesses risk through magnitude and duration, vital for traders' strategies. Understand these distinct concepts for informed financial decisions. Continue reading...
Whats is Commercial Paper?
Commercial Paper is an unsecured short-term loan that a highly rated corporation can issue to finance short-term obligations, like accounts receivable or inventory builds. The high quality paper is typically issued in increments of $100,000 and with a duration of no more than 270 days, which actually makes it a safe investment since the solvency/cash flow of a business is predictable over such a short stretch. Continue reading...
What is an Account Hold?
An Account Hold is similar to the term Account Freeze, as both imply that transactions have been suspended for an account. A client’s financial institution might put a hold on his or her account if the individual is suspected of illegal activity, if the account is overdrawn, or if it is requested by a government entity, such as in a lien by the IRS, among other things. This is slightly different than a “freeze” or “moratorium” on the account. In a freeze, all pending transactions will be canceled and no new requests will be honored. Continue reading...
How Do You Understand Leases? A Comprehensive Guide
Ever wondered about the intricacies of leases and their ripple effects on the economy and society? Dive into our comprehensive guide to uncover the key aspects of leases and their broader implications in the world of real estate. Discover more than just a contract! Continue reading...
FAQ: Are there any AI robots designed specifically for options trading?
[Test] Turn Market Turbulence into Opportunity: Tickeron's Top Robot Shines with 71% Profitable Trades!
Discover how Tickeron's AI robot becomes a beacon of profitability in a week of major stock market downturns. Achieving over 70% in transaction success, it navigates the SP500, NASDAQ 100, and Dow Jones declines with unmatched resilience. Embrace the power of sector rotation strategies, dive into the flexibility of adaptive risk management, and unlock the potential of hedge fund-level analysis. This AI robot is not just surviving the volatile market; it's thriving. Explore how it can transform your swing trading experience. Continue reading...
Is There Anything Else I Need to Know About Bonds?
There will always be more to learn in the investment world: innovation is always happening and the products will change along with market conditions. Bonds are no exception. The bond market is huge — actually larger than the stock market, if you can believe that — and there are literally hundreds of economic, market, and tax-related factors which influence the decisions of which bonds to buy. You must look at the yield curve, duration, rating of the issuer, your own cash flow needs, expected changes in the interest rate environment, changes in the overall health of the economy, tax implications, account in which you're buying bonds, and so forth. Therefore, structuring fixed income accounts is a task which is perhaps better left to professional advisors. Continue reading...
What is a Life Annuity?
Annuities are primarily designed to pay a substantially similar sum at regular intervals until the annuitant dies. Life insurance companies write these contracts since they are designed as a kind of longevity insurance. A lifetime income annuity, sometimes called a life annuity, is a stream of guaranteed payments for the duration of the annuitant’s life, based on the sum used to purchase the lifetime income and the age of the annuitant at the time of purchase. Life annuities can also be joint-life, meaning the contract will pay an amount to either of two people as long as one is alive. Continue reading...
What is a stock downtrend?
A downtrend occurs when the successive peaks of a security's price trend downward without recovering from the troughs, with successively lower market peaks each time. Downtrends may happen in a span of minutes or months, depending on the security being discussed. In a downtrend, it may not be advisable to purchase (or “go long” on) a security, since the duration of the trend is unknown. Many traders, however, see it as an opportunity for short selling. Continue reading...
What is a No-Fee Mortgage?
No-fee mortgages are synonymous with no-cost mortgages, which might apply to first mortgages or refinancing arrangements where the closing costs are paid by the lender, broker, or bank, but a higher interest rate is charged on the loan as a means of recouping those waived fees. Closing costs and fees are calculated based on the total amount being loaned, and might be about 3% for a first mortgage and 1.5% for a refinanced mortgage. When the fees and closing costs associated with a mortgage loan are waived for the borrower, they are usually baked in to a higher interest rate on the loan. Continue reading...
Does IRS Rule 72(t) Provide a Way to Take Early 401(k) Withdrawals Without Penalty?
Rule 72(t) allows the owner of a 401(k) or IRA account to take “substantially equal periodic payments” from an account without owing the 10% early withdrawal penalty. Taking money out of a401(k) or IRA before age 59½ will generally cause someone to owe a 10% early withdrawal penalty. One of the ways this penalty can be avoided, however, is if the participant uses 72(t) distributions. IRS rule 72(t) is the section of the code that describes early withdrawal penalties, but it also allows “substantially equal periodic payments” to be taken from a 401(k) or IRA without owing the 10% penalty. Continue reading...
What Are the Key Advantages and Disadvantages of Banking with Barclays?
Barclays Bank, a titan in the financial world, offers a blend of traditional banking and modern rewards that sets it apart. While giants like Visa and Mastercard dominate the credit card scene, Barclays carves its niche with competitive interest rates, no minimum deposit mandates, and a suite of credit card rewards that cater to diverse financial needs. However, it's not just about the offerings; Barclays' online-only model and acclaimed mobile app make banking a breeze for the digital-savvy user. But every coin has two sides. The absence of physical branches might deter some, and the exclusive nature of certain services could be a constraint for others. Dive deeper into this comprehensive review to unravel the intricacies of Barclays Bank and determine if it's the right financial partner for you. Continue reading...
What Is a Recession? The Economic Downturn Explained
Ever wondered what truly defines a recession and how it impacts our economy? From the tell-tale signs of an inverted yield curve to the dance of interest rates, journey with us as we demystify the complexities of economic downturns and their lasting effects. Equip yourself with knowledge to navigate uncertain financial times. Continue reading...
What Is a Title Loan?
In the realm of personal finance, the term "title loan" has become increasingly prevalent. But what exactly is a title loan, and why have they gained popularity in recent years? In this article, we will delve into the world of title loans, their mechanics, key takeaways, and most importantly, why they are often considered a financially risky choice. Title Loan Definition and Mechanics A title loan is a financial arrangement in which a borrower uses an asset, such as a car, as collateral to secure a loan. The most common form of a title loan is the car title loan, where the borrower owns the car outright and transfers the title to an auto loan title company. In return, the borrower can receive a loan amounting to up to 25% of the car's total value. Continue reading...
Revolutionizing Intraday Trading with AI-Powered Search of Popular Patterns
Step into the future of trading with AI-driven pattern recognition, where sophisticated algorithms meet traditional market wisdom. Explore how the seamless integration of AI with classic patterns like Cup and Handle, Flag, and Head and Shoulders is transforming the trading landscape. Unleash the power of real-time analysis for unparalleled precision and speed in your trading decisions, all while navigating the market's twists and turns with confidence. Continue reading...