What is a Hostile Takeover Bid? A hostile takeover bid is the acquisition of a target company, but one that takes place against the board of directors’ consent. Ideally, an entity interested in a publicly-traded company should seek approval from the respective company’s board of directors. But if the board rejects the acquisition…
What is Homemade Leverage? Homemade leverage is a financial concept that holds that as long as investors borrow on the same terms as the company, they can artificially duplicate the effects of corporate leverage. Investors use the idea to recreate a leverage scenario using a portion of their investments. The argument works under…
What is a Homeowner’s Association (HOA)? A homeowner’s association (HOA) is a private organization formed by property developers to establish and enforce internal regulation that controls land use. It is sometimes referred to as Properties Owners Association (POA) and may also engage in such activities as marketing and selling of properties on behalf of its…
What are Homemade Dividends? Homemade dividends refer to a form of investment income that investors generate from the sale of a percentage of their equity portfolio. The investor fulfills his cash flow objectives by selling a portion of shares in his portfolio instead of waiting for the traditional dividends. Usually, if a shareholder needs some…
What is Quality of Security? Selecting the right quality of security is one of the most important factors to consider in investing. Security refers to a negotiable financial instrument that holds monetary value and represents an ownership stake in a publicly traded corporation, either through stocks, bonds, or options. The security ownership may be represented…
What are Perpetual Bonds? Perpetual bonds – which are also referred to as perpetuals or just “perps” for short – are bonds with no maturity date. They pay interest to investors in the form of coupon payments, just as with most bonds, but the bond’s principal amount does not come with a set date for…
What is Month-to-Month Tenancy? Month-to-month tenancy refers to a form of periodic tenancy in which the landlord leases property to the tenant for a period of 30 days. The tenancy is created through a written, oral, or express agreement. Month-to-month tenancies may be terminated by either party at the expiry of the contract or by…
What is Quality of Real Estate? For potential buyers or investors, determining the quality of real estate is a very important undertaking. Real estate is widely considered as one of the most profitable investments for those looking to build wealth over time and invest in opportunities that provide stable incomes and returns. It is one…
What is Excess Capacity? Excess capacity (or unutilized capacity) occurs when a firm operates or is producing output at less than the optimum level. It can happen when there is a market recession or increased competition, where demand declines and firms are forced to reduce capacity to decrease costs. To increase demand, companies typically decrease…
