The spousal relationship is usually intended to be a permanent one, and with it comes a high degree of financial co-dependence. Today, many working couples will mutually own life insurance for the sake of the other, so that long term financial plans do not have to change drastically if one of them dies. Even in the case of a non-working spouse, they are probably doing something that brings economic value to the household, a contribution which can be insured with life insurance. Life insurance on your spouse may protect you the same way that life insurance on your life can protect your spouse. Continue reading...
Bankruptcy court is a special judicial proceeding which determines how a debtor can settle accounts and move on. Bankruptcy courts are always federal, and not state, courts. They were established in the Constitution and given structure by the Bankruptcy Reform Act of 1978. They give debtors a means of moving beyond debts that cannot be fully repaid. There are several kinds of bankruptcy filings (found here — ‘chapter 7-15’, some for individuals, some for businesses, some involving foreign entities or persons operating in the US. Some are for absolution and the dissolution of a business entity, and other filings are requests for partial debt forgiveness and reorganization of the entity. Continue reading...
Chapter 9 is a form of bankruptcy filing that is reserved for municipalities which have defaulted on their debt obligations. This could include a school district or other entities which have a municipal affiliation and the ability to generate revenue from local taxes. They cannot be made to liquidate anything. In fact, it forces the lender to accept a refinancing of the debt obligation. Because municipalities fall under state jurisdiction, the federal government, which governs bankruptcy court, does not have the ability to force liquidation of a municipal entity’s assets. Instead, this provision of bankruptcy law governs refinancing arrangements to facilitate the repayment of debts owed. Continue reading...
An Abandonment Clause primarily refers to maritime insurance contracts in which a lost vessel can be replaced without the expectation of recovery or salvage, or the terms by which a construction contract or lease agreement can be dissolved. This is not to be confused with an Abandonment Option contract between a financial advisor and his or her client. It can also refer to a frequently used clause in construction law, in which the contractors define an abandoned project and give their counter-parties the right to move on and find another contractor to finish the job. Continue reading...
Medicaid will cover many things, but it is reserved for those without enough assets to get such care on their own or to pay for other coverage. Some examples of covered services include checkups and childbirth for low income pregnant women, and nursing home care for low-income elderly people with long term care needs. Medicaid covers a very wide range of medical costs, including hospital expenses, visits to the doctor, nursing home expenses, and so on. Continue reading...
The Federal Trade Commission (FTC) was originally created to encourage market competition and to protect consumers by breaking up monopolies and monitoring mergers and acquisition activity. It has now branched out into more areas in the pursuit of consumer protection and fair markets. The FTC is now comprised of three bureaus: Consumer Protection, Competition, and Economics. They protect consumers from fraudulent business activity and monopolistic business practices. Continue reading...
The decrease in the usefulness or demand for something as more and more of it is introduced or produced. The easiest way to conceptualize diminishing marginal utility is by thinking of a factory into which you must put workers who will produce goods. The first group of workers you hire increases the productivity immensely compared to what was being produced before they were hired. The second group of workers helps a lot also, but not quite as much as the first. Some of the workers have downtime now for a few minutes a day when no work is being done. You hire a third bunch of workers to increase production to get closer to your competitors, and it works, but now some of the workers are supervisors and the new hires don’t have the same drive and sense of ownership in the company. Continue reading...
Often referred to in the media as “New Highs and New Lows,” the High-Low Index is an observation of the number of stocks which hit 52-week highs or lows in the current day. The High-Low Index is usually expressed as a simple moving average (10-day or longer) of the Record High Percent. A Simple Moving Average (SMA) is a technical indicator that can help traders determine whether a bull or bear trend will continue or reverse course. It typically adds up closing prices for a given time period, then divides that figure by the number of time periods used for the average. Simple moving averages are effective in their simplicity, but their efficacy is most closely tied to how they are used. By giving equal weight to each data point, SMAs can limit bias towards any specific point in a specific time period. Continue reading...
Lifeline accounts are offered by some banks, and are required in some states to be offered by all banks — they give low-income individuals an opportunity to bank without paying fees or observing a minimum balance. This is done in an effort to promote social mobility by giving everyone access to banking services. You are likely to be able to find a bank that offers free checking accounts anyway, but some states have mandated that banks allow for so-called “lifeline accounts,” which have fewer features than other checking accounts but which may be the only banking option available for low-income banking customers. Continue reading...
Market indicators are quantitative tools for the analysis of market information, which may hint or confirm that a trend or reversal is about to happen (leading indicator) or has begun (lagging indicator). Indicators are technical analysis algorithms which give investors signals that may be used as the guidelines for trading. Indicators might be called oscillators or have various other proper names, since some of them are quite well-known, but there are general conventions or instructions for how to use an indicator, how it can be tweaked to suit the scope of your analysis, and what is considered a trade signal. Continue reading...
The Law of Demand states that as prices increase, demand will decrease, and vice versa. That is to say, price and quantity are inversely related. There are some things which have an inelastic demand, meaning the quantity demanded will remain constant no matter the price. Medicine is a good example. Vices to which people are addicted are as well, so some degree, and tobacco stocks are considered fairly safe and defensive in bad economic times. Continue reading...
All other things being equal, if the price of a good increases, the supply of that good will increase, and this is known as the Law of Supply. The Supply Curve is plotted on a graph with a y-axis being price and an x-axis being quantity. The relationship is positive and the line will climb up to the right. The is the opposite direction of the Demand Curve, and the place where the two intersect is considered to be the point of market equilibrium. The curves can be shifted by variables not present on the graph, such as changes in levels of income and other factors, but the slopes will remain the same, theoretically. Continue reading...
Companies in the Materials sector have business interests in raw materials, such as steel, aluminum, and iron ore. The companies are generally involved in the discovery, processing, or sale of these raw materials. Materials companies rely on economic growth and infrastructure build-outs to thrive, so tend to perform better early in economic expansion cycles. Materials companies are categorically ‘cyclical’ stocks. Continue reading...
Moving averages are important components of many technical indicators. The Endpoint Moving Average (EPMA) is a popular method of plotting a line that uses linear regression instead of averages, which reduces the noise of market price activity and can reveal or follow trends. Compared to a simple moving average, this method hews more closely to data and lags less. A moving average line averages prices in a given time period (such as the 30 days leading up to each day), and plots that point on a chart; when connected, the collection of points becomes the moving average line. Continue reading...
A Channel Down pattern shows a clearly defined downtrend and describes the behavior of the price contained between downward sloping parallel lines. Lower lows and lower highs characterize this price pattern. This pattern is created via a lower trendline connecting the swing lows (1, 3, 5), and an upper channel line that joins the swing highs (2, 4, 6). A breakdown below a descending channel’s resistance line points to a continuation of the decline momentum, while a break out above the channel’s resistance line can show a possible trend change. Continue reading...
A lien is a legal filing through which a third party lays claim to certain assets, such as a person’s home, until an amount owed to them is paid. There are mechanic’s liens, judgment liens, and tax liens, any of which could be applied to a person’s home. A lien is a document serving as notice that a significant amount of money is owed to a third party and that certain assets of the debtor may be used to cover the obligation, becoming the property of the lien-holder if the debt is not paid in time. Continue reading...
Technical Indicators are charting tools that appear as lines on charts, or as other kinds of graphical information, which serve as guidelines for buying and selling opportunities. They are based on mathematical formulas, and may be called oscillators, trading bands, and signal lines, among other things. Technical analysts use information about price, volume, standard deviation, and other metrics to construct systems for trading using mathematical formulas which can be translated into useful charting tools. The systems can bring discipline to a trader’s strategy by providing clearly defined circumstances in which a trader has reason to buy, sell, hold, and so on. Continue reading...
The Kaufman’s Adaptive Moving Average (KAMA) was developed by analyst Perry Kaufman in an attempt to cancel out the noise of market volatility and inefficiency by using an efficiency ratio multiple. Kaufman’s algorithm is a bid to cancel out “noise” in the data used to create a moving average line. The Exponential Moving Average (EMA) is imperfect in part because of its reliance on historical data – if the data is not current, it tells traders nothing about how an asset may trend in the future. Some traders also believe that EMAs are biased by virtue of weighting recent data more heavily, which can lead to false signals and potential losing trades. Continue reading...
Large Cap mutual funds primarily invest in companies with the highest market capitalizations. Large capitalization mutual funds, also called “large cap funds,” invest primarily in large companies with market capitalization of over $10 billion. Some examples include Microsoft, General Electric, Google, and other well-known companies. Some large cap mutual funds invest in all of the companies in an index (therefore closely following the performance of that index), and some pick and choose which large companies to select in an attempt to outperform the index. For more information about indices, see “What is Index Investing?” Continue reading...
Delve into the profound world of the Law of Large Numbers, a cornerstone of probability and statistics. This guide offers an in-depth exploration of its principles, applications in various sectors like business, finance, and psychology, and its relationship with other statistical concepts. Whether you're a student, a business professional, or someone intrigued by data analysis, this comprehensive guide sheds light on the intricacies of this fundamental law. Equip yourself with the knowledge to understand the dynamics of large datasets, the challenges of growth, and the nuances of risk and prediction. Continue reading...