Homemade Leverage
What is Homemade Leverage? Homemade leverage is a financial concept that holds that as long as investors borrow on the same terms as the company, they can artificially duplicate the effects of corporate leverage. Investors use the idea to recreate a leverage scenario using a portion of their investments. The argument works under...
Homemade Dividends
What are Homemade Dividends? Homemade dividends refer to a form of investment income that investors generate from the sale of a percentage of their equity portfolio. The investor fulfills his cash flow objectives by selling a portion of shares in his portfolio instead of waiting for the traditional dividends. Usually, if a shareholder needs some...
Quality of Security
What is Quality of Security? Selecting the right quality of security is one of the most important factors to consider in investing. Security refers to a negotiable financial instrument that holds monetary value and represents an ownership stake in a publicly traded corporation, either through stocks, bonds, or options. The security ownership may be represented...
Perpetual Bonds
What are Perpetual Bonds? Perpetual bonds – which are also referred to as perpetuals or just “perps” for short – are bonds with no maturity date. They pay interest to investors in the form of coupon payments, just as with most bonds, but the bond’s principal amount does not come with a set date for...
Home Market Effect
What is the Home Market Effect? The home market effect is a trade theory that argues that countries that exhibit higher demand for some products locally tend to record higher sales of the same products in foreign markets. The home market effect hypothesis was first hypothesized by Stephan Linda (1961) and later formalized by Paul...
