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Common Stock What Does Common Stock Mean? A security that represents ownership in a corporation. Holders of common stock exercise control by electing a board of directors and voting on corporate policy. Common stockholders are on the bottom of the priority ladder for ownership structure. In the event of liquidation, common shareholders have rights to a company's assets only after bondholders, preferred shareholders and other debtholders have been paid in full. Knowledgefinancial.com Explains Common Stock If the company goes bankrupt, the common stockholders will not receive their money until the creditors and preferred shareholders have received their respective share of the leftover assets. This makes common stock riskier than debt or preferred shares. The upside to common shares is that they usually outperform bonds and preferred shares in the long run. Strengths Common stock is very easy to buy and sell. Thanks in large part to the growth of the Internet, it is very easy to find reliable information on public companies, making analysis possible. Preferred Stock What Does Preferred Stock Mean? A class of ownership in a corporation that has a higher claim on the assets and earnings than common stock. Preferred stock generally has a dividend that must be paid out before dividends to common stockholders and the shares usually do not have voting rights. The precise details as to the structure of preferred stock is specific to each corporation. However, the best way to think of preferred stock is as a financial instrument that has characteristics of both debt (fixed dividends) and equity (potential appreciation). Also known as "preferred shares". Knowledgefinancial.com explains Preferred Stock There are certainly pros and cons when looking at preferred shares. Preferred shareholders have priority over common stockholders on earnings and assets in the event of liquidation and they have a fixed dividend (paid before common stockholders), but investors must weigh these positives against the negatives, including giving up their voting rights and less potential for appreciation. |
American Depository Receipt (ADR)Printer friendly version What Is It? Introduced to the financial markets in 1927, an American Depository Receipt (ADR) is a stock that trades in the United States but represents a specified number of shares in a foreign corporation. ADRs are bought and sold on U.S. stock markets just like regular stocks and are issued/sponsored in the U.S. by a bank or brokerage. ADRs were introduced in response to the difficulty of buying shares from other countries which trade at different prices and currency values. U.S. banks simply purchase a large lot of shares from a foreign company, bundle the shares into groups and reissue them on either the NYSE, AMEX or Nasdaq. The depository bank sets the ratio of U.S. ADRs per home country share. This ratio can be anything less than or greater than 1. For example, a ratio of 4:1 means that one ADR share represents four shares in the foreign company. |
American Depositary Receipt (ADR) An American Depositary Receipt (abbreviated ADR) represents ownership in the shares of a non-U.S. company that trades in U.S. financial market ADRs (Depositary Receipts): Global Investing & Personal Finance American Depositary Receipt - ADRWhat Does American Depositary Receipt - ADR Mean? A negotiable certificate issued by a U.S. bank representing a specified number of shares (or one share) in a foreign stock that is traded on a U.S. exchange. ADRs are denominated in U.S. dollars, with the underlying security held by a U.S. financial institution overseas. ADRs help to reduce administration and duty costs that would otherwise be levied on each transaction. KNOWLEDGEFINANCIALGROUP.COM explains American Depositary Receipt - ADR This is an excellent way to buy shares in a foreign company while realizing any dividends and capital gains in U.S. dollars. However, ADRs do not eliminate the currency and economic risks for the underlying shares in another country. For example, dividend payments in euros would be converted to U.S. dollars, net of conversion expenses and foreign taxes and in accordance with the deposit agreement. ADRs are listed on either the NYSE, AMEX or Nasdaq. |
Over-The-Counter (OTC) What Does Over-The-Counter - OTC Mean? A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" can be used to refer to stocks that trade via a dealer network as opposed to on a centralized exchange. It also refers to debt securities and other financial instruments such as derivatives, which are traded through a dealer network. KNOWLEDGEFINANCIALGROUP.COM explains Over-The-Counter - [OTC} In general, the reason for which a stock is traded over-the-counter is usually because the company is small, making it unable to meet exchange listing requirements. Also known as "unlisted stock", these securities are traded by broker-dealers who negotiate directly with one another over computer networks and by phone. |
The Other Animals on the Farm - Chickens and Pigs Chickens are afraid to lose anything. Their fear overrides their need to make profits and so they turn only to money-market securities or get out of the markets entirely. While it's true that you should never invest in something over which you lose sleep, you are also guaranteed never to see any return if you avoid the market completely and never take any risk, Pigs are high-risk investors looking for the one big score in a short period of time. Pigs buy on hot tips and invest in companies without doing their due diligence. They get impatient, greedy, and emotional about their investments, and they are drawn to high-risk securities without putting in the proper time or money to learn about these investment vehicles. Professional traders love the pigs, as it's often from their losses that the bulls and bears reap their profits. What Type of Investor Will You Be? There are plenty of different investment styles and strategies out there. Even though the bulls and bears are constantly at odds, they can both make money with the changing cycles in the market. Even the chickens see some returns, though not a lot. The one loser in this picture is the pig. Make sure you don't get into the market before you are ready. Be conservative and never invest in anything you do not understand. Before you jump in without the right knowledge, think about this old stock market saying: |
Buyer's Market When the news is reporting grim figures about real estate and housing prices it's hard to be enthusiastic about jumping into the real estate market. But investors could have said the same thing about investing in the stock market in 2009, when the S&P 500 dropped to its lowest point in more than 10 years; however, those who chose solid companies during the low point saw major gains when the market rebounded through 2010. A real estate buyer's market occurs when there is more property for sale (supply), than there are buyers (demand), forcing prices down. While this type of market is bad news for homeowners who want to sell their homes, it's great for those entering the real estate market. In this case, new homebuyers have the opportunity to buy properties at a low point. The lack of competition in the market will also allow them to take their time choosing a property, and provide them with some bargaining leverage. Because in some cases home prices may not rebound for a long time, buyers need to choose their homes carefully and look for areas where homes are truly undervalued - and not just cheap. Buyers should also weigh the fact that they'll have to pay to live somewhere - whether they buy or rent - so even a property that maintains its value may provide significant savings over time. Buyer's Market -A lot of houses are on the market and staying there for an extended period of time compared to previous months or years. -"For Sale" signs are staying up longer. -Sale prices are declining. |
Financial Industry Regulatory Authority {Finra} In the United States, the Financial Industry Regulatory Authority, Inc., or FINRA, is a private corporation that acts as a self-regulatory organization (SRO). FINRA is the successor to the National Association of Securities Dealers, Inc. (NASD). Though sometimes mistaken for a government agency, it is a non-governmental organization that performs financial regulation of member brokerage firms and exchange markets. FINRA Investor Education Foundation - FINRA Investor Education ...The FINRA Investor Education Foundation provides underserved Americans with the knowledge, skills and tools necessary for financial success throughout life. KNOWLEDGE FINANCIAL GROUP - KNOWLEDGEFINANCIALGROUP.COM |
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Bear Market A market trend is a putative tendency of a financial market to move in a particular direction over time.[1] These trends are classified as secular for long time frames, primary for medium time frames, and secondary lasting short times.[2] Traders identify market trends using technical analysis, a framework which characterizes market trends as a predictable price response of the market at levels of price support and price resistance, varying over time. The terms bull market and bear market describe upward and downward market trends, respectively, and can be used to describe either the market as a whole or specific sectors and securities.[2] |
COMMODITY A commodity is a good for which there is demand, but which is supplied without qualitative differentiation across a market.[1] A commodity has full or partial fungibility; that is, the market treats it as equivalent or nearly so no matter who produces it. Examples are petroleum and copper.[2] The price of copper is universal, and fluctuates daily based on global supply and demand Commodity What Does Commodity Mean? 1. A basic good used in commerce that is interchangeable with other commodities of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis grade. Commodities - Gold prices, Silver prices and more from CNNMoney.comMar 22, 2011 ... Get the latest trading prices for commodities such as gold, silver, platinum, copper, oil and more. Prices, data and news headlines Commodities News, Commodity Trading Prices & Data | Reuters.comDry cargo shippers with smaller vessels are shifting to more-risk, more-reward spot markets, eyeing rising demand for sugar and grains Commodity Futures Online Trading - BloombergGet updated data about commodity futures. Find information about commodity prices and trading, and find the latest commodity indexes comparison charts. www.bloomberg.com/markets/commodities/futures |
Derivative What Does Derivative Mean? A security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage. Futures contracts, forward contracts, options and swaps are the most common types of derivatives. Derivatives are contracts and can be used as an underlying asset. There are even derivatives based on weather data, such as the amount of rain or the number of sunny days in a particular region. Derivatives are generally used as an instrument to hedge risk, but can also be used for speculative purposes |
Market Order A market order is an order to buy or sell a stock at the best available price. Generally, this type of order will be executed immediately. However, the price at which a market order will be executed is not guaranteed. A market order tells your broker to execute your trade at the prevailing price It is important for investors to remember that the last-traded price is not necessarily the price at which a market order will be executed. In fast-moving markets, the price at which a market order will execute often deviates from the last-traded price Stock Orders - Understanding Stock Order Entry A market order instructs your broker to buy or sell the stock immediately at the current price... Trade Execution Isn’t Instantaneous Many investors who trade through online brokerage accounts assume they have a direct connection to the securities markets. But they don't. When you push that enter key, your order is sent over the Internet to your broker—who in turn decides which market to send it to for execution. A similar process occurs when you call your broker to place a trade. |
Limit Order A limit order is an order to buy or sell a stock at a specific price or better. Limit order An order to a broker to buy a specified quantity of a security at or below a specified price, or to sell it at or above a specified price (called the limit price). This ensures that a person will never pay more for the stock than whatever price is set as his/her limit. Stop-Limit Order What Does Stop-Limit Order Mean? An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will be executed at a specified price (or better) after a given stop price has been reached. Once the stop price is reached, the stop-limit order becomes a limit order to buy (or sell) at the limit price or better. Stop-Limit Order The primary benefit of a stop-limit order is that the trader has precise control over when the order should be filled. The downside, as with all limit orders, is that the trade is not guaranteed to be executed if the stock/commodity does not reach the stop price. The Stop-Loss Order - Make Sure You Use It A stop order is an order that becomes executable once a set price has been reached and is then filled at the current market price. A limit order is one that is at a certain price or better. By combining the two orders, the investor has much greater precision in executing the trade. |
Knowledge Financial Group - Knowledgefinancialgroup.com is there to provide business oriented people,traders and, or investors with investment information which they can hopefully use to become more educated investors. Hedge Fund - What is hedge fund? - Understanding how hedge funds work... A hedge fund is an investment fund that is typically open to a limited range of investors who pay a performance fee to the fund's investment manager. Every hedge fund has its own investment strategy that determines the type of investments it undertakes and these strategies are highly individual. As a class, hedge funds undertake a wider range of investment and trading activities than traditional long-only investment funds, and invest in a broader range of assets including long and short positions in shares, bonds and commodities. As the name implies, hedge funds often seek to hedge some of the risks inherent in their investments using a variety of methods, notably short selling and derivatives. In most jurisdictions, hedge funds are open only to a limited range of professional or wealthy investors who meet criteria set by regulators, and are accordingly exempted from many of the regulations that govern ordinary investment funds. The net asset value of a hedge fund can run into many billions of dollars, and the gross assets of the fund will usually be higher still due to leverage. Hedge funds dominate certain specialty markets such as trading within derivatives with high-yield ratings and distressed debt Hedge Fund What Does Hedge Fund Mean? An aggressively managed portfolio of investments that uses advanced investment strategies such as leveraged, long, short and derivative positions in both domestic and international markets with the goal of generating high returns (either in an absolute sense or over a specified market benchmark). Legally, hedge funds are most often set up as private investment partnerships that are open to a limited number of investors and require a very large initial minimum investment. Investments in hedge funds are illiquid as they often require investors keep their money in the fund for at least one year. --------------- Hedge fund A hedge fund is an investment vehicle and a business structure that pools capital from a number of investors and invests in securities and other instruments. It is administered by a professional management firm, and often structured as a limited partnership, limited liability company, or similar vehicle. ----------------- Hedge Fund For the most part, hedge funds (unlike mutual funds) are unregulated because they cater to sophisticated investors. In the U.S., laws require that the majority of investors in the fund be accredited. That is, they must earn a minimum amount of money annually and have a net worth of more than $1 million, along with a significant amount of investment knowledge. LEARN MORE, READ MORE BELOW! We at knowledge financial group – knowledgefinancialgroup.com // we empower consumers to take more control over their financial lives. |
Stocks Basics: The Bulls, The Bears And The Farm The Bulls A bull market is when everything in the economy is great, people are finding jobs, gross domestic product (GDP) is growing, and stocks are rising. Things are just plain rosy! Picking stocks during a bull market is easier because everything is going up. Bull markets cannot last forever though, and sometimes they can lead to dangerous situations if stocks become overvalued. If a person is optimistic and believes that stocks will go up, he or she is called a "bull" and is said to have a "bullish outlook". The Bears A bear market is when the economy is bad, recession is looming and stock prices are falling. Bear markets make it tough for investors to pick profitable stocks. One solution to this is to make money when stocks are falling using a technique called short selling. Another strategy is to wait on the sidelines until you feel that the bear market is nearing its end, only starting to buy in anticipation of a bull market. If a person is pessimistic, believing that stocks are going to drop, he or she is called a "bear" and said to have a "bearish outlook". |
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The Definition Of: American Depository Receipt (ADR), Over Thee-Counter (OTC), Derivatives, Mutual Funds, Hedge Funds / Common Stock, Prefferred Stock, Bull Market, Bear Market, Exchange-Traded Funds (ETF), Market Order / Financial Knowledge Stock Market, Limit Order, Stop-Limit Order, Buyer's Market, Sellers' Market ,Balance Market, Nasdaq, Euronext, New York Stock Exchange (NYSE), [Finra] Financial Industry Regulatory Authority {Finra}, NYSE, Nasdaq, S&P, American Stock Exchange - AMEX / Financial Education. Finra, NYSE, Nasdaq, S&P, Preferred Stock, Common Stock, Buyer's Market, Seller's Market, Letter of credit, Letter of intent |
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Hedge Funds: What should I know if I am considering investing in a hedge fund? A. Be an accredited investor. You generally must be an accredited investor, which means having a minimum level of income or assets, to invest in hedge funds. ----------- B. Read a fund's prospectus and related materials. Make sure you understand the level of risk involved in the fund's investment strategies, and that the risks are suitable to your personal investing goals, time horizons, and risk tolerance. As with any investment, the higher the potential returns, the higher the risks you must assume. ------------- C. Understand how fund assets are valued. Hedge funds may hold investments that are difficult to sell and may be difficult to value. You should understand the valuation process and know the extent to which a fund's holdings are valued by independent sources. -------------- D. Understand fees. Fees impact your return on investment. Hedge funds typically charge an asset management fee of 1-2% of assets, plus a “performance fee” of 20% of the hedge fund’s profit. --------------- E. A performance fee could motivate a hedge fund manager to take greater risks in the hope of generating a larger return. -------------- F. Understand any limitations on your right to redeem your shares. Hedge funds typically limit opportunities to redeem, or cash in, your shares, to four times a year or less, and often impose a "lock-up" period of one year or more, during which you cannot cash in your shares. ---------------- G. Research hedge fund managers. Make sure hedge fund managers are qualified to manage your money, and find out whether they have a disciplinary history within the securities industry. H. You can get this information by reviewing the adviser’s Form ADV, which is the investment adviser's registration form. You can search for and view a firm’s Form ADV using the SEC’s Investment Adviser Public Disclosure (IAPD) website. ------------- I. If you don’t find the investment adviser firm in the SEC’s IAPD database, call your state securities regulator or search FINRA's BrokerCheck database. ------------- J. Ask questions. You are entrusting your money to someone else. You should know where your money is going, who is managing it, how it is being invested, and how you can get it back. In addition, you may wish to read FINRA’s investor alert, which describes some of the risks of investing in funds of hedge funds. |