What is Dynamic Asset Allocation? Dynamic asset allocation is an investment strategy that involves the frequent adjustment of the weights in a portfolio based on the overall market performance or the performance of certain securities. Under the dynamic allocation strategy, a portfolio manager assesses the current market conditions and the performance of each asset class….
What is the Holding Period Return? The Holding Period Return (HPR) is the total return on an asset or investment portfolio over the period for which the asset or portfolio has been held. The holding period return can be realized if the asset or portfolio has been held, or expected if an investor only anticipates…
What is a Lock-Up Agreement? A lock-up agreement refers to a legally binding contract made between the insiders and underwriters of a company during its initial public offering (IPO) that prohibits them from selling any of their shares for a set period of time. These individuals may include venture capitalists, company directors, managers, executives, employees, and…
What is the Lock-up Period? A lock-up period, also called a locked-up, lock-in, or lock-out period, refers to the predetermined time frame in which corporate insiders, investors, and employees are not allowed to sell or redeem their shares after an initial public offering (IPO). It normally happens in instances where a private entity offers its…
What are Financial Markets? Financial markets, from the name itself, are a type of marketplace that provides an avenue for the sale and purchase of assets such as bonds, stocks, foreign exchange, and derivatives. Often, they are called by different names, including “Wall Street” and “capital market,” but all of them still mean one and…
What is Parabolic SAR? The Parabolic SAR is a technical indicator developed by J. Welles Wilder to determine the direction that an asset is moving. The indicator is also referred to as a stop and reverse system, which is abbreviated as SAR. It aims to identify potential reversals in the price movement of traded assets….
What is the Preferred Habitat Theory? The preferred habitat theory states that the market for bonds is ‘segmented’ by term structure and that bond market investors have preferences for these segments. According to the theory, bond market investors prefer to invest in a specific part or ‘habitat’ of the term structure. The preferred habitat theory…
What is the Segmented Markets Theory? The segmented markets theory states that the market for bonds is ‘segmented’ on the basis of the bonds’ term structure, and that ‘segmented’ markets operate more or less independently. Under the segmented markets theory, the return offered by a bond with a specific term structure is determined solely by…
What is the Russell 2000? The Russell 2000 is a stock market index that tracks the performance of 2,000 US small-cap stocks from the Russell 3000 index. The Russell 2000 index is widely quoted as a benchmark for mutual funds that consist primarily of small-cap stocks. It is also a benchmark for the performance of small-cap…
What is Open Outcry? Open outcry is a trading method used in futures pits and stock exchanges where traders use verbal and nonverbal signals to communicate. Before the advent of electronic trading, nearly all financial trading was conducted via open outcry. This is the picture people see of stockbrokers on TV shouting and using hand…
