What do ETFs Invest In?
ETFs invest in a wide array of securities, and which ones depends on the goal, strategy, or index that the ETF is built around. ETFs hold baskets of individual securities, of which investors can purchase an undivided interest in the form of ETF shares. ETFs can be a good option if you want quick diversification, and there is an increasingly diverse selection of ETFs on the market. Many investment companies have issued new ETFs in the last 10 years. One of the biggest issuers is Barclays - one of the largest investment banks in the world — through their ETF brand iShares. Continue reading...
What is the minimum investment in a typical venture capital fund?
Minimum investments in venture capital funds tend to be vast sums of money. They tend to be for $1 million or more but can be as low as $250,000. As with hedge funds, the minimum investment is very steep and suitable only for accredited investors and qualified buyers. A typical minimum investment in a VC fund varies between $1 to $5 million, but it can be over $25 million. Most of the investments in venture capital funds are made in terms of commitments: you commit a certain amount of money, and when a venture capital fund finds an appropriate investment, it makes a “call” on you to deposit the money with them, perhaps in increments over a period of several years. Continue reading...
What are My 401(k) Investment Options?
401(k)s can offer many options for investment, but they generally only offer 15 or fewer in each plan. Investment options in your 401(k) are completely determined by the agreement between your employer and the custodian. Therefore, you’re limited to the investment instruments selected for you. The majority of 401(k) plans will offer fewer than 15 investment options, which are generally part of prepackaged 401(k) products from major broker-dealers or mutual fund companies. Large companies will frequently also offer stock of their company within the 401(k) plan architecture. Continue reading...
What is Earnings Momentum?
Earnings momentum is an indicator that is computed by not just looking at the earnings performance and estimations of a company, but looking at the positive or negative direction of earnings and the acceleration in that direction. Momentum in securities is much like momentum in physics. Where there is momentum, it is hard to slow things down and charge direction. Instead of looking only at the growth of earnings, which could be the slope of the inclining line, momentum also looks for increases in change to the growth rate, making earnings growth more parabolic or exponential. Continue reading...
How Does Blockchain Technology Work?
Blockchains are intended to maintain integrity in the system without anyone needing to monitor or control it. By instituting a system of checks and balances that functions on its own accord through rules programmed into the protocol, and which also makes decisions and keeps records based on consensus throughout a peer-to-peer network, a blockchain oversees its own activities without requiring any trust in a central authority or the other parties involved. Continue reading...
Can Blockchains Reduce Fraud and Failed Payments?
Blockchains can validate, clear, and document transfers of value much faster and more securely than traditional methods. Blockchains offer an extremely efficient and reliable means of processing transactions of any size in a way that reduced the likelihood of fraud and failed payments. If a cryptocurrency wallet says that there is a specific balance present in a specific wallet, then that balance is there; it can be validated using the transaction record held on the thousands of computers on a b... Continue reading...
What is Cash Flow-to-Debt Ratio?
Comparing operating cash flow to the size of a company’s debt obligations can give investors and analysts an idea of how capable a company is of paying of its debts. This ratio compares the size of a company’s cash flow from operations to the size of its debt, in an effort to get an idea of how capable a company is of paying off its debt obligations, and how long it would take if all cash flow were diverted to debt service. Continue reading...
What is a market-on-open order?
Traders can enter time-specific trade orders in the form of opening or closing orders, which are only to be executed as close to the opening or closing price as possible. Market-on-open orders are looking to buy or sell immediately after the market opens, at the opening price. Market-on-open orders are instructions for a broker or floor trader (even though we don’t see those much anymore these days) to buy or sell shares at opening price of the stock being traded. Continue reading...
What is a Margin Call?
A margin call is a mandatory request by the custodian/broker for the account holder to add equity to the account, either by depositing cash or selling securities to raise cash. When an investor takes an account on margin, the custodian will require that they keep a certain amount of equity/cash in the account to maintenance the borrowed amount. If the account value drops past a certain level, the custodian may require the investor to add equity to the account to cover the margin balance. Continue reading...
What is an FX swap?
A Foreign Exchange (FX) Swap is a short-term arrangement where a company or institution swaps domestic currency for another, then swaps it back after a short time - this may involve the use of a Forward contract. If a company sells something internationally, and they now hold a significant amount of foreign currency, they may want to exchange it for their domestic currency. If, however, they already have a payment obligation in the foreign currency within the next few months, they may use an FX Swap arrangement. Continue reading...