General Obligation Bond
What is a General Obligation (GO) Bond? A general obligation (GO) bond is a type of municipal bond in which the bond repayments (interest and principal) are guaranteed by the total revenue generated by the relevant government entity or agency. In other words, the repayment is guaranteed by both tax revenue and operating revenue generated...
Theory of Liquidity Preference
What is the Theory of Liquidity Preference? The Theory of Liquidity Preference states that agents in financial markets demonstrate a preference for liquidity. Formally, if U(Asset A) > U(Asset B) and rA = rB, then L(Asset A) > L(Asset B), where: U(Asset A) is an investor’s utility from holding asset A U(Asset B) is an investor’s...
Dividend Policy
What is a Dividend Policy? A company’s dividend policy dictates the amount of dividends paid out by the company to its shareholders and the frequency with which the dividends are paid out. When a company makes a profit, they need to make a decision on what to do with it. They can either retain the...
Chaikin Money Flow (CMF)
What is the Chaikin Money Flow (CMF)? The Chaikin Money Flow (CMF) is an indicator created by Marc Chaikin in the 1980s to monitor the accumulation and distribution of a stock over a specified period. The default CMF period is 21 days. The indicator readings range between +1 and -1. Any crosses above or below...
Equal-Weighted Index
What is an Equal-Weighted Index? An equal-weighted index is a stock market index – comprised of a group of publicly traded companies – that invests an equal amount of money in the stock of each company that makes up the index. Thus, the performance of each company’s stock carries equal importance in determining the total...
