Investment Terms

The Phillips curve is an economic theory that inflation and unemployment have a stable and inverse relationship. Developed by William Phillips, it claims that with economic growth comes inflation, which in turn should lead to more jobs and less unemployment. The original concept of the Phillips curve has been somewhat disproven due to the occurrence of stagflation in the 1970s, when there were hig...

Operating income is an accounting figure that measures the amount of profit realized from a business's operations after deducting operating expenses such as wages, depreciation, and cost of goods sold. Operating income also called income from operations takes a company's gross income, which is equivalent to total revenue minus COGS, and subtracts all operating expenses. A business's operating expe...

Fringe benefits are additions to compensation that companies give their employees. Some fringe benefits are given universally to all employees of a company while others may be offered only to those at executive levels. Some benefits are awarded to compensate employees for costs related to their work while others are geared to general job satisfaction. Employers use fringe benefits to help them rec...

Futures are derivative financial contracts that obligate parties to buy or sell an asset at a predetermined future date and price. The buyer must purchase or the seller must sell the underlying asset at the set price, regardless of the current market price at the expiration date. Underlying assets include physical commodities and financial instruments. Futures contracts detail the quantity of the...

Free carrier is a trade term dictating that a seller of goods is responsible for the delivery of those goods to a destination specified by the buyer. When used in trade, the word free means the seller has an obligation to deliver goods to a named place for transfer to a carrier. The destination is typically an airport, shipping terminal, warehouse, or other location where the carrier operates. It...

Escrow is a legal concept describing a financial agreement whereby an asset or money is held by a third party on behalf of two other parties that are in the process of completing a transaction. Escrow accounts are managed by the escrow agent. The agent releases the assets or funds only upon the fulfilment of predetermined contractual obligations. Money, securities, funds, and other assets can all...

A bill of lading is a legal document issued by a carrier (transportation company) to a shipper that details the type, quantity, and destination of the goods being carried. A bill of lading also serves as a shipment receipt when the carrier delivers the goods at a predetermined destination. This document must accompany the shipped products, no matter the form of transportation, and must be signed b...

The term balanced scorecard refers to a strategic management performance metric used to identify and improve various internal business functions and their resulting external outcomes. Used to measure and provide feedback to organizations, balanced scorecards are common among companies in the United States, the United Kingdom, Japan, and Europe. Data collection is crucial to providing quantitative...

A Bollinger Band is a technical analysis tool defined by a set of trendlines. They are plotted as two standard deviations, both positively and negatively, away from a simple moving average of a security's price and can be adjusted to user preferences. Bollinger Bands was developed by technical trader John Bollinger and designed to give investors a higher probability of identifying when an asset is...

The term annuity refers to an insurance contract issued and distributed by financial institutions to pay out invested funds in a fixed income stream in the future. Investors invest in or purchase annuities with monthly premiums or lump-sum payments. The holding institution issues a stream of payments in the future for a specified period or the remainder of the annuitant's life. Annuities are mainl...

Analysis of variance is an analysis tool used in statistics that splits an observed aggregate variability found inside a data set into two parts: systematic factors and random factors. The systematic factors have a statistical influence on the given data set, while the random factors do not. Analysts use the ANOVA test to determine the influence that independent variables have on the dependent var...

The last mile describes the short geographical segment of delivery of communication and media services or the delivery of products to customers located in dense areas. Last-mile logistics tend to be complex and costly to providers of goods and services who deliver to these areas. Delivery of telecommunications and media content is instantaneous and very fast for physical products to the perimeter...

Environmental, social, and governance investing refers to a set of standards for a company’s behaviour used by socially conscious investors to screen potential investments. Environmental criteria consider how a company safeguards the environment, including corporate policies addressing climate change, for example. Governance deals with a company’s leadership, executive pay, audits, internal contro...

A shelf offering is a Securities and Exchange Commission provision that allows an equity issuer to register a new issue of securities without having to sell the entire issue at once. The issuer can instead sell portions of the issue over a three-year period without re-registering the security or incurring penalties. A shelf offering is also known as a shelf registration; it is formally known as SE...

A command economy is a key aspect of a political system in which a central governmental authority dictates the levels of production that are permissible and the prices that may be charged for goods and services. Most industries are publicly owned. The main alternative to a command economy is a free market system in which demand dictates production and prices. The command economy is a component of...

A bull market is the condition of a financial market in which prices are rising or are expected to rise. The term bull market is most often used to refer to the stock market but can be applied to anything that is traded, such as bonds, real estate, currencies, and commodities. Because prices of securities rise and fall essentially continuously during trading, the term bull market is typically rese...

Open interest is the total number of outstanding derivative contracts, such as options or futures that have not been settled for an asset. Open interest keeps track of every open position in a particular contract, rather than tracking the total volume traded in it, which may also include netting or closing positions. Thus, open interest can provide a more accurate picture of a contract's liquidity...

A U.S. savings bond is a government bond offered to its citizens to help fund federal spending, and it provides savers with a guaranteed, although modest, return. These bonds are issued with zero coupons at a discount with an implied fixed rate of interest over a fixed period of time. Series EE savings bonds are sold at 50% of their face value, and mature to their full value after 20 years. When t...

Student loan forgiveness releases borrowers from their obligation to repay part or all of their federal student loan debt. These borrowers have taken out loans to pay for their post-secondary education. Forgiveness is available for some types of loans, but eligibility is limited to borrowers in certain public service, educational, or military professions. Loan forgiveness means a debt (or part of...

An IRA rollover is a transfer of funds from a retirement account, such as an employer-sponsored plan, into an individual retirement account. The purpose of a rollover is to maintain the tax-deferred status of those assets. IRA rollovers are commonly used to hold 401(k), 403(b), or profit-sharing plan assets that are transferred from a former employer’s sponsored retirement account or qualified pla...

The statutory debt limit often referred to as the debt ceiling, was the limit set by Congress to the amount of debt that the U.S. government can take on. It also includes interest payments on existing debt. Once the government reaches the statutory debt limit, it cannot take on new obligations. The statutory debt limit was a legal limit to the total amount that the U.S. Treasury was authorized to...

Gemini is a privately-owned cryptocurrency exchange that lets you buy, sell, trade, and securely store more than 60 cryptocurrencies. It was launched in 2014 by Cameron and Tyler Winklevoss under the formal name Gemini Trust Co., LLC.1 Gemini has a tiered service with separate interfaces and fee structures for casual investors and hardcore traders. I t has a mobile app, a payment app, and its own...

ChatGPT, the free chatbot released in November 2022 by artificial intelligence research company OpenAI, has taken the internet by storm. In its first months of existence, The “GPT” in ChatGPT refers to the “Generative Pre-training Transformer,” referring to the way that ChatGPT processes language. ChatGPT inspired users to imagine a host of use cases for the model, including using ChatGPT to negot...

A people poison pill is a defensive strategy designed to deter or prevent unwanted takeovers from happening. Once an unwelcomed approach is made to assume control of the target company, its management team reacts by signing a pact vowing to all resign if the deal somehow gets completed. The people pill strategy is a variation of the poison pill defence. A people poison pill is one of several defen...

An exchange-traded fund is a type of pooled investment security that operates much like a mutual fund. ETFs will track a particular index, sector, commodity, or other assets, but unlike mutual funds, ETFs can be purchased or sold on a stock exchange the same way that a regular stock can. An ETF can be structured to track anything from the price of an individual commodity to a large and diverse col...