What are Emerging Markets? “Emerging markets” is a term that refers to an economy that experiences considerable economic growth and possesses some, but not all, characteristics of a developed economy. Emerging markets are countries that are transitioning from the “developing” phase to the “developed” phase. Characteristics of Emerging Markets Some common characteristics of emerging markets…
What is the Modern Portfolio Theory (MPT)? The Modern Portfolio Theory (MPT) refers to an investment theory that allows investors to assemble an asset portfolio that maximizes expected return for a given level of risk. The theory assumes that investors are risk-averse; for a given level of expected return, investors will always prefer the less…
What is Fintech (Financial Technology)? As financial services companies adapt to rising consumer expectations and shifting technology, a wave of fintech innovation is transforming how people and businesses manage money. From digital banking to disruptive fintech startups, the industry is evolving faster than ever. But what is fintech, and why does it matter to today’s…
What is the Securities Investor Protection Corporation (SIPC)? The Securities Investor Protection Corporation (SIPC) is a non-profit, member-funded organization that works to protect customers from financial loss when a brokerage firm goes bankrupt. The SIPC was created in the United States in 1970 under the Securities Investor Protection Act in order to reduce insecurity among…
What are Robo-Advisors? Robo-advisors are online investment management services that employ mathematical algorithms to provide financial advice with minimal human intervention. They use their algorithms to manage and allocate client assets in the most efficient way possible. Robo-advisors use online questionnaires that obtain information about the clients’ degree of risk-aversion, financial status,…
What is an Acceleration Clause? An acceleration clause is a covenant in loan agreements that requires borrowers to repay the full principal amount upon breach of contract or failure to meet certain requirements set by the lender. Acceleration clauses are most prevalent in the real estate industry, where they protect the lender when the borrower…
What are Futures and Forwards? Future and forward contracts (more commonly referred to as futures and forwards) are contracts that are used by businesses and investors to hedge against risks or speculate. Futures and forwards are examples of derivative assets that derive their values from underlying assets. Both contracts rely on locking in a specific…
What is a Liquidity Premium? A liquidity premium compensates investors for investing in securities with low liquidity. Liquidity refers to how easily an investment can be sold for cash. T-bills and stocks are considered to be highly liquid since they can usually be sold at any time at the prevailing market price. On the other…
What Are Preferred Shares? Preferred shares, also called preferred stock, are a unique class of equity ownership in a company, but with bond-like features such as fixed dividends. Investors buy preferred shares for steady dividend income and potentially higher yields. Preferred shareholders are also paid before common shareholders, but after debt holders, in the event…
