What is the Weighted Mean? The weighted mean is a type of mean that is calculated by multiplying the weight (or probability) associated with a particular event or outcome with its associated quantitative outcome and then summing all the products together. It is very useful when calculating a theoretically expected outcome where each outcome has…
What is the International Chamber of Commerce (ICC)? Based in Paris, France, the International Chamber of Commerce (ICC) is an organization comprised of more than six million members from countries around the world, tasked primarily with representing and helping to establish rules that affect and govern the interests of individuals and organizations in every part…
What is Foreclosure? When a homeowner stops paying on a loan used to purchase a home, the home is deemed to be in foreclosure. What this ultimately means is that the ownership of the home switches from the homeowner to the bank or lender that provided the loan. During the initial stages of foreclosure, the…
What is Probate? Probate is the legal and financial process that occurs after the death of an individual and specifically deals with the individual’s will, property, and assets. Probate can be a time-consuming process and typically includes court appearances and a lot of paperwork. Among the many things sorted out during the probate period are:…
What is an Annualized Total Return? An annualized total return is the return earned on an investment each year. It is computed as a geometric average of the returns of each year earned over a period. It is also known as the Compounded Annual Growth Rate (CAGR). The annualized rate of return allows investors to…
What is Naked Shorting? Naked shorting is the practice of selling short a stock or other tradeable security without first borrowing the shares to sell or arranging to borrow them. Naked shorting is not illegal in every jurisdiction, but it is prohibited in the United States. Naked Shorting vs. Ordinary Short Selling In ordinary short…
What is a Naked Put? A naked put refers to a situation where an investor sells a put option without already having an equivalent short position in the option’s underlying security. It is one of the ways that an investor can profit from changes in the price of a security without directly investing in the…
What is a Naked Option? A naked option is an investing term that refers to an investor selling an option without holding a corresponding position in the option’s underlying security. Selling naked options is considered a high-risk trading practice, as it exposes the investor to high potential loss, while only providing a limited profit. Nonetheless,…
What is Data-Mining Bias? Data-mining bias refers to an assumption of importance a trader assigns to an occurrence in the market that actually was a result of chance or unforeseen events. The data-mining bias, for many analysts, is considered an “insidious threat” because it can sneak up on traders and analysts alike during the research…
Examples of Black Swan Events in Everyday Life While black swan events are most commonly associated with the financial world, there are plenty of examples of black swan events in everyday life. A common misconception about black swan events is that they are always negative events, but that is not always the case. The primary…
