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What are Passive Investing and Passive Investors? Passive investing and passive investors are ones who opt to ride the market out over the long ter...

When a bond is secured, it means it's protected, i.e. there are assets that would be forfeited if repayment is not made. When it's unsecured... it'...

Power of attorney refers to the authorization to conduct business on legal and financial matters on behalf of another party. So...choose wisely.

What is liquidity? Think: water. It's liquid. It can be squeezed into little, tiny spaces and infused into large spaces. A defining trait of liquid...

A liquid market is a market featuring high trading volumes, i.e. investors actually want to put their cash to work.

What's a yankee bond, and does it stick a feather in its cap and call it macaroni?

What is an Executor? An executor is someone who carries out a deceased person’s wishes as stated in their will or takes control of their estate a...

What is a limited partnership? A limited partnership is one in which at least one party is a general partner who assumes personal liabilities and i...

A trust deed lays out the rights and obligations of the bank underwriting the purchase of inventory/assets. That said, it won't catch you in a trus...

What is a partnership? A partnership is an arrangement where two or more parties agree to form a business in cooperation with each other. Partnersh...

Over the counter refers to a trade transacted within a network of other dealers who are all trading stocks.

Who is Warren Buffett, and how do we get him to give us a loan...?

What is the gold standard, besides the standard at which this video is judged? Hit play to find out.

What are CEOs, CFOs, and COOs? The “C” level executives in a corporation are the corporate officers responsible for the management decisions an...

What does it mean to be vested? Vested refers to having an interest in something. It’s typically used when talking about retirement plans and thi...

"Golden handcuffs" refers to someone vesting into their stock options by sticking it out at their company. It won't go on their permanent record.

What is an Affiliated Person or Affiliated Investor? An affiliated person is known as an insider in the financial world. These are the people who h...

What does it mean to "go public?" An IPO raises cash in the form of equity, usually, for investors. When public, a company exists under SEC dominio...

PERLS is a bond that pays interest twice a year, but whose yield is linked to a given foreign exchange rate. It also doesn't string very well on a...

What is a Blue Chip? Blue chip stocks are stocks with very large market caps; basically meaning their issued stock is worth a lot of money. These c...

What is Payment in Kind/PIK? PIK is the technical term for barter payment. If you give your plumber a pair of tickets for an NFL game that are worth the same as the fee he would have charged for a toilet repair, that would be an example of PIK. Another example is when Disney used PIK for its acquisition of Marvel Entertainment by paying in Disney stock rather than in cash. Mutual Funds that make distributions in additional shares would also be categorized as PIK instead of cash.

What is an Associated Person? An associated person is just an employee of a broker or a dealer that are involved in trading. These people must be certified depending on their jobs and follow SEC regulations; thus people like secretaries are often not included.

What's the SEC? Easy. Seals Eating Candy. Or maybe Silly Elephants Canoodling? We can never remember. Guess it's time to watch this video and refresh our memories.

What are Dividends: Declaration date, Dated date, Pay date, Effective date, Ex-distribution date, Ex-Date, and Reset date? Dividends are sums of money or shares of stock paid to shareholders as a result of favorable earnings. The goal is to pay dividends regularly so it is possible that they could still be paid in times of not so great earnings. The declaration date begins the process of paying dividends and marks the day when dividends are announced. Dividends are paid out on the pay date and the ex-dividend date marks when stock must be purchased by in order to receive the next round of dividends. On the record date, the company determines which shareholders are eligible to receive dividends, thus the ex-dividend date is one day before this.

What is an LLC? LLC stands for Limited Liability Company. It is a hybrid type of company that combines the corporate protections of separating corporate and personal assets and liabilities with tax advantages and other elements of partnerships and sole proprietorships. The LLC’s tax liabilities are paid at the shareholder’s personal level, so the LLC only files returns without payments. Unlike the corporation, the LLC cannot outlive its founders unless there are continuation agreements. Additionally, new shareholders can be added without corporate resolution in the LLC.

What is Regulation Full Disclosure? Publicly traded companies are required by SEC rules to release full disclosure of all info related to material events of the company within legal limits and federal statutes. For example, in order to be compliant with SEC rules, Northrop Grumman could announce a new deal to supply fighter jets for the USAF and the dollar amount of the deal, as well as for how many units over what period of time. However, national security rules would prevent the need to disclose the kind of weaponry or tactical stealth capabilities that the aircraft may include.

Reg A is an exemption for the sale of securities. We wonder if it has any sweet steel drums in the background.

What are operating profits, net profits and gross profits? Profits for a company can be calculated several different ways depending on what metric is being cited. Gross profits are measured by total revenues minus cost of goods or services sold. Of course, a company also has operating expenses, as well as depreciation and amortization, which are accounting deductions on equipment and other property belonging to the company. The Operating profit subtracts those elements from the Gross profit. The Net profit also factors in taxes and interest, which are also company costs that can apply against revenues. Naturally, the Net profit will result in the smallest number. Gross profit is also sometimes referred to as EBITDA, which is Earnings Before Interest, Taxes, Depreciation and Amortization.

What is stock based compensation? Stock based compensation is exactly what it sounds like: a way to compensate employees using stock. It’s used in the form of purchasing options that employees may exercise, usually after a few years.

Who benefits from unions? Trade unions ostensibly exist to protect the interests of their rank and file constituent members. They were crucial for enacting safety rules and fair practices during the early and mid periods of industrialization in Western society. Changes in labor laws and increased flexibility in human resources, the resurgence of small businesses, and the corruption problems between trade union officers and organized crime have reduced private sector participation in trade unions membership.

What is the difference between common and preferred shares? Common stock is at the bottom. It comes at the very end, when a company is sold, in the priority stack. It sits behind bank debt, the IRS, preferred stock, and pretty much everything else. The big advantage of common stock? It is the proletariat of investing: common stock shareholders elect the board of directors, who then are responsible for managing the company from 37,000 feet.

What are pink sheets? And can we bleach them to make them white again?

What are shares outstanding? The total size of the pie. All of the shares outstanding comprise the total votes and value of a given company. If XYZ.com has a million shares outstanding, and its stock trades for $12 a share, the marketplace is saying it is worth $12M.

An MBO is a Management Buy Out (a buy out by inside management); an LBO is a Leveraged Buy Out (taking on debt to buy a company).

What are Debt Service and Debt Service Ratio? Debt service is the amount of funds needed by a borrower to successfully cover interest and principal payments over a specified time period. The debt service ratio is a calculation of net operating income divided by total debt service. The quotient of the calculation gives the Debt Service Ratio and the difference of the service numbers from the income indicate if the borrower can handle additional debt if needed.

What is an Accumulated Dividend? Accumulated dividends are dividends paid on cumulative preferred stock. They are referred to as accumulated because they are a combination of previous and current dividends, none of which have been paid to the shareholder yet.

What is Dividend Yield? Similarly to how a bond’s price and coupon is calculated to determine yield, dividend paying stocks also have a yield ascribed to their dividends. This is calculated by the amount of the dividend divided by the share price. Just like with bonds, the lower the share price, or cost basis, the higher the yield, which is crucial for portfolio management accounting.

What is paid-in-capital and capital surplus? Hit play to find out.

In trying to assess the value of a company, market capitalization refers to the number of stock shares times the stock price. Perceived value in this case is predicated upon the price that buyers are willing to pay for the stock in the market. When referring to equity, it is a more detailed calculation of worth, as it subtracts liabilities from assets to determine the company’s break up value, i.e, if everything in the company had to be sold. An analogy would be what a diamond necklace might be worth at an auction at Sotheby’s vs. its breakup individual stone value per karat weight at a pawnshop jeweler.

A pooled interest occurs when two or more investors combine capital in order to make a joint investment. Especially if investing in a prosthetics company.