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What is a Balloon Payment?
A balloon payment is a lump sum due at the end of a balloon loan term. In a balloon loan arrangement, the payment schedule does not amortize the entire amount of the loan, but instead allows for lower installment payments by holding a lump-sum payment until the end of the term. These terms are usually relatively short, such as 5 years, and often these arrangements are taken by individuals or consumers who plan on refinancing before the balloon payment comes due. Continue reading...
What is Book Value?
Book value is based on an accounting method that only considers certain factors, generally the more tangible or easily quantifiable ones, and excludes the more ethereal factors such as ‘goodwill.’ Book value can apply to an individual asset, a security, or a company, and tends to be pretty straightforward. Whatever value an asset is given on a balance sheet is its book value. For a tangible asset, this is calculated as the cost of the asset minus accumulated depreciation. Continue reading...
What does price to tangible book value (PTBV) mean?
Price to Tangible Book Value serves as a conservative estimation of the value inherent in a share, without Goodwill and other intangibles (opposite of tangibles) factored in. Price to Tangible Book Value (PTBV) is a ratio of the share price over the Tangible Book Value of a company and helps investors see what inherent value is present on a company's books. The Tangible Value does not include goodwill, patents, and other intangible values. Continue reading...
What are Tangible Assets?
Tangible assets are the property of a company that are tangible and can be quickly liquidated. This includes current-period accounts receivable and money in checking, savings, and money-market accounts. Buildings, land, equipment and inventory are all tangible assets as well. Tangible assets are an important part of a company’s book value. For most valuations, intangible assets such as patents, other intellectual property, and goodwill are not included. 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...
Will Ripple Make a Superior Payment System?
Ripple is already making waves in the banking world and may be poised to become the #1 option for cross-border settlements between banks worldwide. Ripple is described as giving cross-border payments a protocol as universal as Http does for the web. The current default system for communicating cross-border payments, SWIFT, has been around since the 1970s, but transactions can take nearly a week to settle. This is because SWIFT only provides secure messaging services for the requests from different institutions, but each transaction still requires several intermediaries who each might take a day to negotiate or complete their part in the deal. Ripple offers a revolutionary way to complete transactions in a matter of seconds, by directly linking banks around the world and cutting out the middlemen wherever possible. Continue reading...
Revolutionizing Fintech: The Potent Potential of Artificial Intelligence
Discover how the fusion of AI and fintech is revolutionizing the financial sector. From enhancing security to improving customer interactions, automating processes, and democratizing access to sophisticated investment tools, the potent potential of AI in fintech is reshaping the future of finance. Dive in to explore the transformative power of AI in fintech! Continue reading...
What is a Bond Ladder?
A bond ladder is a portfolio of bonds that have different maturities, that may range from months to years in difference. A bond ladder is designed to reduce interest rate risk and create predictable income streams. An investor will build a bond ladder often in an effort to reduce interest rate risk and also to create predictable income streams, where coupon payments happen at different times and principal is also returned in various intervals. Continue reading...
Should I consolidate my debt?
This seems to be a better choice than debt settlement, and it may make payments easier. Debt consolidation allows people to pay one bill a month towards their debt obligation, rather than many, and it may also give them a lower interest rate payment. A debt consolidation company or bank can settle the outstanding debts of the individual; this settlement amount plus fees becomes the principal loan amount or a new loan, which will probably be designed to have lower payments than the individual was paying before consolidation. Continue reading...
What is an Income Bond?
Income bonds are issued by companies and they will only pay a coupon or interest rate if the company generates adequate earnings to do so. Non-payment of a coupon or interest rate does not necessarily mean that the company is in default. The principal amount plus some interest is due to the bondholder at maturity. Income bonds are sometimes issued by companies who are experiencing hard times and cannot guarantee a coupon payment to bondholders. Continue reading...
What is a Home Equity Line of Credit (HELOC)?
Much like a Reverse Mortgage or Second Mortgage, a HELOC gives homeowners the ability to convert their home equity into cash. A HELOC is a line of credit secured by the equity in your home. Homeowners can choose when to use the funds, and there are repayments due according to a schedule in the contract. It functions as a revolving line of credit, similar to a credit card with large limits. Some people find themselves interested in a HELOC if they have a large balloon payment due on a loan, perhaps even their home mortgage loan. They are also sometimes used as a debt consolidation tool to pay off credit cards and other outstanding debts (but, for this, fixed-rate home equity loans are more popular). Continue reading...
Is there any merit to fundamental analysis of the markets?
Fundamental analysis has been around for a long time, and will probably always remain relevant. Fundamental Analysis is the oldest and most well-established market theory. Fundamental analysis is to take all the real-world information about a company into account when evaluating securities and to acknowledge that the shares are what they are: partial ownership in a company. It follows that someone should know about the company and its earnings potential. Continue reading...
What is a Dividend Reinvestment Plan?
A Dividend Reinvestment Plan, referred to as DRIP, is a plan offered by corporations that allows investors to reinvest their dividends in full or partial shares of additional stock, on the dividend payment date. Accessing a DRIP is typically a good long-term investment play - it allows for the investor to repurchase shares at a discount to the share price, and by accumulating additional shares over time increases equity ownership in the company. Continue reading...
What is the Risk/Return Trade-Off
There are investments which have the potential for very high returns, but they will always be that much riskier than the lower-yielding alternatives, and this is part of the risk/return trade-off. The relationship between risk and return is a positive linear relationship in most theoretical depictions, and if an investor seeks greater returns, he or she will have to take on greater risk. This is called the risk/return trade-off. For more stability and less risk, an investor will have to sacrifice some potential returns. Continue reading...
What is a Quote?
Quotes are current pricing information about individual securities on an exchange. A potential investor will refer to a current quote to see what price a security traded at most recently. A quote will also show the bid and ask prices, which indicates the price other buyers are attempting to buy the security for (bid), and the price sellers are trying to sell it for (ask). If you are selling, you're going to get the bid price, and if you're buying, you're going to pay the ask price. The difference between the two is called the spread, and will basically be pocketed by the broker or specialist that handles the transaction. A security with a spread of zero indicates high liquidity and is referred to as a frictionless asset or trade. Continue reading...
What is Dividend Selling?
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...
What is a ratio put spread?
A ratio put spread uses multiple put contracts in a certain ratio that makes them start off delta-neutral. Ratio put spreads are similar to regular spreads, but instead of using the same number of put contracts sold short as are held long, ratio spreads are set up with more of one than the other, in a ratio such as 2:1 or 3:2. The short contracts will have different strike prices than the long contracts. Continue reading...
What is Accounts Receivable Financing?
Financing companies can step in and take over the accounts receivables of a company who no longer wants to wait to be paid on their receivables. Financing companies, who are sometimes called Factoring Companies or Factors, will pay about 75% of the amount due to companies who want to offload or outsource their Receivables. The factoring company will then take over the task of collections, and will transfer most of the money received back to the original company, after their fees have been deducted from the proceeds. Continue reading...
What is Cash On Delivery?
Sometimes when orders are made for the delivery of goods at a person’s residence or place of business, they can choose to only pay once the goods have been delivered. Payment by COD (Cash On Delivery) is an option that older Americans are likely more familiar with than younger Americans, but it still takes place. In this payment arrangement, a customer can wait until the goods have been delivered before actually paying for them. Continue reading...
What should I look for in a good Mortgage Calculator?
Mortgage payment arrangements can be engineered in a number of ways, and a good mortgage calculator will give you enough flexibility to input the terms of your own. Ideally a mortgage calculator will be flexible enough to let you input the following: an adjustable rate, a rate cap, optional mortgage “acceleration” payments, balloon payments and resets, impound account calculations which take into account the property taxes and insurance you pay, as well as calculations which take any origination fees into account. Continue reading...