Participating Preferred Stock
What is Participating Preferred Stock? Participating preferred stock gives the holder the right to a specific dividend which is separate from the dividends common stockholders receive and is also received before common stockholders. It is a clause that also gives preferred stock holders priority of accumulated dividends over common stockholders in the event that the...
Molodovsky Effect
What is the Molodovsky Effect? The Molodovsky Effect is the imperial observation by Nicholas Molodovsky that at the bottom of an economic cycle, P/E ratios are high, and earnings are low. However, at the top of an economic cycle where there is an economic boom, the P/E ratios are low, and earnings are high. The...
Dominant Strategy
What is Dominant Strategy? The dominant strategy in game theory refers to a situation where one player has superior tactics regardless of how their opponent may play. Holding all factors constant, that player enjoys an upper hand in the game over the opposition. It means, regardless of the strategies employed by the opponent, the dominant...
Inefficient Market
What is an Inefficient Market? An indicator of an inefficient market is when a specific security price at any particular time does not reflect its true value. This market functions differently from the efficient markets hypothesis. For example, when new information from a recent event occurs, an efficient market would quickly disperse this information to...
Federal Open Market Committee (FOMC)
What is the Federal Open Market Committee (FOMC)? The Federal Open Market Committee (FOMC) is responsible for the monetary policy of the United States by overseeing the open market operations of the country. The FOMC is a part of the Federal Reserve System. Headed by the chair, Jerome H. Powell, the committee comprises twelve total...
