What is a Spot Price? The spot price is the current market price of a security, currency, or commodity available to be bought/sold for immediate settlement. In other words, it is the price at which the sellers and buyers value an asset right now. Although spot prices can vary by time and geographic regions, the prices…
What is Day Trading? The main attribute of day trading is that the purchasing and selling of securities occurs within the same trading day. It means that all trading positions are liquidated at the end of a trading day. The main goals of day trading are discovering and leveraging short-term market inefficiencies. Unlike many investors,…
What is Pre Money Valuation? Pre money valuation is the equity value of a company before it receives the cash from a round of financing it is undertaking. Since adding cash to a company’s balance sheet increases its equity value, the post money valuation will be higher because it has received additional cash. …
What is Post Money Valuation? Post money valuation is the equity value of a company after it receives the cash from a round of financing it is undertaking. Since adding cash to a company’s balance sheet increases its equity value, the post money valuation will be higher than the pre money valuation because it has…
What Does Undervalued Mean? An undervalued asset is an investment that can be purchased for less than its intrinsic value. For example, if a company has an intrinsic value of $11 per share but can be purchased for $8 per share, it is considered undervalued. Intrinsic Value An investment is either overvalued or undervalued relative…
What Does Overvalued Mean? An overvalued asset is an investment that trades for more than its intrinsic value. For example, if a company with an intrinsic value of $7 per share trades at a market value $13 per share, it is considered overvalued. Intrinsic Value An investment is either undervalued or overvalued compared to its…
What is the CDS Payout Ratio? The CDS Payout Ratio is the proportion of the insured amount that the holder of the credit default swap is paid by the seller of the swap if the underlying asset defaults. How It Works Suppose an investor holds €10,000,000 worth of 5-year Spanish government bonds. The bonds pay…
What is Investment Horizon? Investment horizon is a term used to identify the length of time an investor is aiming to maintain their portfolio before selling their securities for a profit. An individual’s investment horizon is affected by several different factors. However, the primary determining factor is often the investor’s risk tolerance. Investment horizons are…
What is a Speculator? A speculator is an individual or firm that, as the name suggests, speculates – or guesses – that the price of securities will go up or down and trades the securities based on their speculation. Speculators are also people who create fortunes and start, fund, or help to grow businesses. Venture…
What is an Exit Fee? An exit fee is a charge imposed on an investor when he sells shares or withdraws money from an investment fund before a specified time. The investment industry is full of hidden charges. Exit fees are an example of such costs that can have a considerable impact on an individual’s…
