What is an Index-Linked Bond? An index-linked bond is used to protect the income earned by bond investors against inflation. Index-linked bonds are linked to a country’s inflation index. For example, the U.K. issues index-linked bonds called linkers that are linked to the Retail Price Index (RPI). Similarly, Canada issues Real Return Bonds (RRBs) that…
What is the FOMC Dot Plot? The FOMC (Federal Open Market Committee) dot plot, alternatively called the Fed’s dot plot, is a chart that summarizes the FOMC’s outlook for the federal funds rate. It is published quarterly and watched closely by investors and economists for indications on the future trajectory of the federal funds rate….
What is the Fed Beige Book? The Fed Beige Book, also referred to as the “Summary of Commentary on Current Economic Conditions,” is a qualitative report outlining current U.S. economic conditions across the 12 Federal Reserve districts. It is published eight times a year by the U.S. Federal Reserve. Understanding the Purpose of the Fed…
What is a Frothy Market? A frothy market, a common Wall Street jargon, refers to a market condition where asset prices are notably detached from their true intrinsic value. Simply put, a frothy market is a market that is exhibiting unsustainable rapid price appreciation. If unresolved, it precedes a market bubble and a subsequent market…
What is a Hard Stop? A hard stop is an instruction from a client to their broker which informs them to sell units of a security when the market price declines to a specific level. Hard stops are used to minimize risk and reduce potential losses in the financial market when price fluctuations and unexpected…
What is a Hardship Withdrawal? A hardship withdrawal is an urgent removal of funds from a retirement plan and is usually done in emergency situations. Conducting a hardship withdrawal is considered a “special distribution,” which is exempt from any sort of financial repercussions if the withdrawal meets specific criteria. Due to immediate need, a hardship withdrawal…
What is a Hard Inquiry? A hard inquiry is a credit information report that is requested by specific organizations and lenders in order to evaluate potential credit risk. If a hard inquiry is requested, it will generally cause some negative impact and reduce the amount of points on the borrower’s credit score. Hard inquiries are…
What is Hard Money? Hard money comes with many different meanings depending on the context and can relate to currency, loans, and political donations, to name a few. In general, it refers to a specific funding chain that is generally provided by a government agency or other financial organizations. Rather than a one-time permit, hard…
What is a Financial Plan? A financial plan is a document that covers an individual’s current financial situation, short-term and long-term economic goals, and an in-depth strategy to achieve the goals. A financial plan should incorporate every aspect of an individual’s finances, which include savings, investing, debt, insurance, taxes, retirement, and an assortment of other…
What is the Klinger Oscillator? The Klinger oscillator is a financial tool that was designed by Stephen Klinger in 1977 to predict long-term trends in money flow while also detecting short-term fluctuations. In addition, it predicts price reversals in a financial market by extensively comparing volume to price. Volume refers to how many units of a…
