Tag: bond

Defensive Investment Strategy definition explanation

What is Defensive Investment Strategy?
A method of portfolio allocation and management aimed at minimizing the risk of losing principal. Defensive investors place a high percentage of their investable assets in bonds, cash equivalents, and stocks that are less volatile than average. Read more for examples and further explanation including related video clips and also comments
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Asset Class definition explanation

What is Asset Class?
A group of securities that exhibit similar characteristics, behave similarly in the marketplace, and are subject to the same laws and regulations. The three main asset classes are equities (stocks), fixed-income (bonds) and cash equivalents (money market instruments). Read more for examples and further explanation including related video clips and also comments
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Derivative definition explanation

What is Derivative?
A security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage. Read more for examples and further explanation including related video clips and also comments
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Secondary Liquidity definition explanation

What is Secondary Liquidity?
A form of liquidity that is part of an initial public offering when shares are distributed to both retail and institutional players. These secondary parties may then sell the security to other interested buyers, with an exchange typically acting as an intermediary.

Secondary holders, or liquidity providers, often hold fewer shares and provide less liquidity and/or share volume than the initial underwriter. Read more for examples and further explanation including related video clips and also comments
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Fund Category definition explanation

What is Fund Category?
A way of differentiating mutual funds according to their investment objectives and principal investment features. This categorization allows investors to spread their money around in a mix of funds with a variety of risk and return characteristics. Read more for examples and further explanation including related video clips and also comments
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Bond ETF definition explanation

What is Bond ETF?
A type of exchange-traded fund (ETF) that exclusively invests in bonds. Bond ETFs are very much like bond mutual funds in that they hold a portfolio of bonds and can differ widely in strategies, ranging from U.S. Treasuries to high yields, from long-term to short-term. Bond ETFs trade like stocks and are passively managed. Read more for examples and further explanation including related video clips and also comments
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Illiquid definition explanation

What is Illiquid?
The state of a security or other asset that cannot easily be sold or exchanged for cash without a substantial loss in value. Illiquid assets also cannot be sold quickly because of a lack of ready and willing investors or speculators to purchase the asset. The lack of ready buyers also leads to larger discrepancies between the asking price (from the seller) and the bidding price (from a buyer) than would be found in an orderly market with daily trading activity. Read more for examples and further explanation including related video clips and also comments
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Opportunity Cost definition explanation

What is Opportunity Cost?
1. The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.

2. The difference in return between a chosen investment and one that is necessarily passed up. Say you invest in a stock and it returns a paltry 2% over the year. In placing your money in the stock, you gave up the opportunity of another investment – say, a risk-free government bond yielding 6%. In this situation, your opportunity costs are 4% (6% – 2%). Read more for examples and further explanation including related video clips and also comments
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