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What is Dividend Policy?

Different companies have different approaches to dividends: whether to pay them, whether it’s a fixed amount in the budget or dependent on the kind of expenses they incur each year. These and other considerations make up what is known as a company’s dividend policy. Companies may have a different phases in their development that will lead them to adopt different dividend policies along the way. As a young company in the Growth category, the dividend policy will most likely be not to distribute any dividends. Continue reading...

What is Fiscal Policy?

Fiscal Policy refers to the tactics used by a central government to influence the nation’s economy, whether by setting tax and/or spending policies. Fiscal policy is related to monetary policy, in that they are both aimed to either boost an economy or temper growth to avoid overheating. A fiscal policy conducive to growth would aim to have low taxes and higher level of spending. When a government invokes “austerity” measures, it means they are trying to cut spending most likely to reel-in budget deficits or overall debt levels. Continue reading...

What is Monetary Policy?

Monetary policy is the stance of the central bank at any given time regarding the tightening or loosening of rates, or the issuance of new currency denominations, that will affect the money supply in the country. Monetary policy is the prerogative of the central bank but may be influenced by congress as well as private banking institutions and the central banks of other countries. The goal of monetary policy is to keep the Federal Funds Rate or the LIBOR, or whatever it might be depending on the country, at just the right level to keep the economy going in the direction that will be most helpful. Continue reading...

What Provisions Should a Long-Term Care Policy Contain?

Long-term care insurance policies can be structured in any number of ways, depending on your desired coverage. More coverage equals more premium cost, but may save you money later in life if you use your policy for a number of years. There are a variety of provisions (also known as riders) to consider, including but not limited to the dollar amount of your daily benefit (usually $200 - $500), whether it is a reimbursement or paid in full, which facilities qualify for coverage, what kind of assistance you’ll provided, whether or not it includes a nurse on duty 24 hours a day, access to a doctor, whether you’ll have a room to yourself or not, and so on. Continue reading...

What factors affect currency exchange rates?

Currency exchange rates will fluctuate with various macroeconomic factors such as inflation, interest rates, trade balance, and so on, as well as political climate. Currency exchange rates are influenced by a number of factors, with some experts listing 5, some experts listing as many as 10. The main variables that will affect exchange rates are inflation rates, interest rates, the trade balance / current account, speculation in Forex markets, and government policies and interventions. Continue reading...

What is Hyperinflation?

Hyperinflation is when a rate of inflation grows exponentially, and a currency is rapidly devalued. Hyperinflation occurs in the midst of dire economic circumstances. This is usually partially due to the piling on of downward price pressure in which newly printed currency rapidly floods the market as the government attempts to cover debt obligations. Sometimes this stems from situations where the government is having trouble receiving adequate taxes from the population. Continue reading...

What is currency substitution?

Currency Substitution can be an official or ad hoc occurrence in a country whose commerce is partially, or fully, conducted using the currency of another country. Some currencies which are pegged to another currency at a fixed rate (especially at whole integers) are domestically exchanged in the same manner that the local currency is. Many countries have completely adopted the currency of another country, and do not have a central bank of their own. Continue reading...

What is the Federal Open Market Committee?

The Federal Open Market Committee (FOMC) is the monetary policy-making body of the Federal Reserve System. The FOMC makes the decision on “raising” or “lowering” interest rates, which refers to moves in the federal funds rate. The FOMC consists of 12 members, which is comprised of the seven members of the Board of Governors and 5 of the 12 Reserve Bank presidents. The president of the Federal Reserve Bank of New York always has a seat on the FOMC, while the other presidents rotate for one year terms. This policy-making body meets eight times a year to decide monetary policy, which consists of setting the benchmark interest rate and make decisions regarding the supply of money. All dependent on economic conditions. Continue reading...

What is Second-To-Die Life Insurance?

Second-to-die policies are also known as survivorship policies, and are primarily used by married couples to provide a guaranteed legacy to their children after they have both passed away. These come in handy for estate planning, when an estate tax bill might be looming for the heirs. To be clear, this insurance covers the lives of two individuals and provides a death benefit to a listed beneficiary only after the last surviving insured individual dies. Continue reading...

What is Stagflation?

Stagflation is the occurrence of both stagnation, which is slowing growth and production levels, and inflation, which is the increase of the average cost of goods. If production costs rise for some reason, such as higher oil prices, it can cause economic growth to slow down and the supply of goods in the market to drop. This is known as stagnation. The weakened supply of goods in the market and the higher production costs of the goods will cause the retail prices of the good in the market to go up. Continue reading...

What is foreign exchange intervention?

If a central bank takes actions that intentionally and artificially affect the value of a currency, particularly its own, it is engaging in what is known as a Foreign Exchange Intervention, or an interventionist policy. Central banks occasionally use interventions in foreign exchange markets to achieve a desirable end. The banks will intentionally make trades and hold certain amounts of currencies or derivatives with the sole purpose of manipulating the value of their domestic currency. The reasons for that manipulation might be to slow down inflation or to make their county’s exports look more attractive by pushing the value of their currency lower. Continue reading...

What is the Consumer Price Index (CPI)?

The Consumer Price Index (CPI) is a measure of the average change, over time, in the prices paid by urban consumers for a market basket of consumer goods and services. The CPI is an important economic indicator, as it’s changes influence the Federal Reserve’s monetary policy decisions and it gives an indication if an economy is experiencing adequate inflation. The most common reading on the CPI is % change from a previous period, with most developed economies generally striving for 2% annualized inflation. Continue reading...

What is the Federal Reserve Bank?

The Federal Reserve banking system was created in 1913, the same year that income taxes were added to the US Constitution. 12 regional Fed banks were established, each of which plays a role in monitoring and implementing interventions to the flow of money in the economy. The Federal Reserve Bank is a 12-bank system in the United States that plays the role of the country’s central bank. Central banks in other countries are typically part of the government and print the actual currency, but in this case the Fed is independent of the actual US government, and the Treasury Department technically prints the money. Continue reading...

What is the Federal Reserve System?

The Federal Reserve System was established by the Federal Reserve Act of 1913, which created a network of reserve banks that could help to prevent economic meltdowns by serving as a regulator and a source of funds. There are 12 regional Federal Reserve Banks which monitor banks in their jurisdiction and make loans when necessary. The Federal Reserve System is sometimes referred to as one bank, but it is in fact a network of 12 banks with 24 branches, overseen by a Board with members nominated by the US Government. Continue reading...

What is currency in circulation?

Currency in circulation tends to be defined as the currency held by commercial banks, and currency with the public, without including long-term deposits or investments. As much as 2/3rd of Currency in Circulation is held outside of the borders of the US, and is estimated to be around $1.5 trillion as of 2016. Currency in Circulation is one part of what’s known as the money supply. Money supply is divided into four levels: M0, M1, M2, and M3. Some might define currency in circulation as the larger part of M0, which is the money base, constituted by the currency held in commercial banking institutions and excluding central bank reserves / Federal funds. This definition disregards the Currency with Public, which is included in other definitions and is part of M1. Continue reading...

What is a commodity?

A commodity is usually a raw material or agricultural good which has an extremely high demand and very little price differentiation between competitors. If a good will not increase or decrease significantly in quality regardless of who brings it to market, and the demand is very high (such as for a good used in the production of many other products) it might be considered a commodity. Examples would be oil, silver, gold, steel and wheat, but a full list would be very extensive. Continue reading...

What is the foreign credit insurance association?

The Foreign Credit Insurance Association protects American businesses from non-payment in international trade deals where goods were sold on credit. The Foreign Credit Insurance Association (FCIA) is a group of insurance companies which underwrite the foreign credit insurance sold by the Export-Import Bank of Washington DC. The Export – Import Bank, also known as the Ex/Im Bank, is an independent government entity that facilitates and encourages some international trade activity of American companies. Continue reading...

What is a currency basket?

Currency baskets are composed of weighted amounts of certain currencies. The most common use of a currency basket is as a benchmark for certain economic analysis, but it can also be used as a unit of account where an international organization has constituents that use various currencies. A basket of currencies is a weighted index of various currencies which serves a specific purpose as a benchmark or as a unit of account. Continue reading...

What is an 'expiration date' in reference to option trading?

An ‘expiration date’ refers to the time when an option contract must either be acted upon by the owner (buying or selling the security in question) or left to expire. With derivatives such as options and futures, there will be an expiry, or expiration date in the contract, after which they expire worthlessly. Most options contracts will expire in 3, 6 or 9 months from when they are generated, and they all share the same expiration day of the month on their contracts in the United States, which is the 3rd Friday of the month at 4 PM. Continue reading...

Paper Trades: Learn How to Trade, Risk-Free

Tickeron's Paper Trades are the best way to start trading on paper without losing money. Paper Trades can be used as a testing environment for ideas generated using other products. You can review your gains or losses and adjust your trading style, risk-free. Paper Trades are available for 4,000 stocks, 1,000 ETFs, 30,000 mutual funds, 500 cryptocurrencies, and 100 Forex pairs. From any Tickeron, product page, click the Paper Trades button to extract your trade ideas and test them using Paper Trades. The system will run a record of the securities you want to buy and sell, and will generate the modeled outcome. The more Paper Trades you make, the more statistics Tickeron will generate for you to determine your trading style and preferences. Continue reading...