Modern Portfolio Theory (MPT)
What is the Modern Portfolio Theory (MPT)? The Modern Portfolio Theory (MPT) refers to an investment theory that allows investors to assemble an asset portfolio that maximizes expected return for a given level of risk. The theory assumes that investors are risk-averse; for a given level of expected return, investors will always prefer the less...
Securities Investor Protection Corporation (SIPC)
What is the Securities Investor Protection Corporation (SIPC)? The Securities Investor Protection Corporation (SIPC) is a non-profit, member-funded organization that works to protect customers from financial loss when a brokerage firm goes bankrupt. The SIPC was created in the United States in 1970 under the Securities Investor Protection Act in order to reduce insecurity among...
Liquidity Premium
What is a Liquidity Premium? A liquidity premium compensates investors for investing in securities with low liquidity. Liquidity refers to how easily an investment can be sold for cash. T-bills and stocks are considered to be highly liquid since they can usually be sold at any time at the prevailing market price. On the other...
Preferred Shares
What Are Preferred Shares? Preferred shares, also called preferred stock, are a unique class of equity ownership in a company, but with bond-like features such as fixed dividends. Investors buy preferred shares for steady dividend income and potentially higher yields. Preferred shareholders are also paid before common shareholders, but after debt holders, in the event...
Exponential Moving Average (EMA)
What is the Exponential Moving Average (EMA)? The Exponential Moving Average (EMA) is a technical indicator used in trading practices that shows how the price of an asset or security changes over a certain period of time. The EMA is different from a simple moving average in that it places more weight on recent data...
