ShmoopTube

What is After Hours Trading/Extended Trading? After hours trading describes any trades made after the market closes or before the market opens. Bec...

What is the Dow Jones Industrial Average? The Dow Jones Industrial Average is usually just called the Dow. It’s an average of 30 of the most well...

What do you need to retire? Retirement - think: 401k, pension fund, IRA, roth IRA, etc. All of these savings socked away while you worked hard are...

Painting the tape is an illegal way to manipulate stock prices. And yes, it’s still illegal, even if you paint it super pretty.

Investment objectives and styles vary from investor to investor. Some are in it for the long haul. Others, um... don't look at "Ponzi" as a dirty w...

What are the differences in S&P’s and Moody’s ratings? Both S&P and Moody’s give ratings that help investors determine if they are making sma...

What is AMBAC? AMBAC stands for American Municipal Bond Assurance Corporation. It provides insurance for municipalities that sell muni bonds, such...

What are credit ratings and how are they interpreted? Credit ratings describe a borrower’s likelihood to pay back their debts; it’s a look at h...

What are bond ratings and what do they mean? Bond ratings are just credit ratings used on bonds. Just like a credit rating, they give the investor...

What is the Federal Funds Rate? The federal funds rate is the interest rate used for overnight lending between banks. The amount banks are able to...

The Federal Open Market Committee's purpose is to manage financial outcomes through monetary policy.

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

What is tax loss selling? Hit play to find out.

How do you judge the performance of an index fund? For index funds, they're really just a reflection of the stocks and bonds they, uh... reflect. S...

Trading volume is the number of shares trading back and forth at a given time.

What is Fitch Investors Service? Fitch Investors Service is a securities rating agency. Investors use Fitch to determine if they should or shouldn�...

What is a Bucket Shop? Bucket shops are, for lack of better terms, sketchy brokerage firms. They make investors believe that crappy penny stocks th...

What is a muni bond? Muni bonds are bonds issued by the government. They are used to raise the money required to pay for government responsibilitie...

What is Bond Amortization? Bond amortization is simply the spreading out of the cost of the bond over time. Bonds have amortization schedules and t...

What is term life insurance, and variable life insurance? Hit play to find out, and, uh...let's hope you live long enough to figure out the answers.

What is a cost-benefit analysis? Prudent management of a company will often deploy cost-benefit analysis to quantify the degree of finances, resources, and man hours may go into a new project or initiative and whether or not the projected benefits, profits and advantages will be worth the costs of the launch.

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.

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 process of a loan? Collateral. Do you have it? The bank lending you money wants to be sure that A) they get paid back, and B) they charge you enough rent or interest on the money you are borrowing such that it matches the risk the bank is taking.

What is the Dividend Discount Model? Valuation of stocks can take numerous forms. One way in which one perspective on undervalued stocks is determined is by use of the Dividend Discount Model. Applying this method involves calculating dividends and expected dividend growth rates from the cost of equity to determine a stock’s current value and whether or not the current market price is discounted or at a premium to that value calculation.

What is Discounted Cash Flow? Discounted Cash Flow is a model that’s used to determine the value of an investment or company. It’s pretty complicated, so it’s not the first thing most people would consider calculating when deciding whether or not to make an investment. It also uses future cash flow predictions, so it is a bit helpful when estimating growth. If it’s found that the expected future cash flows will create an increase in value as compared to current value, it’s probably a good investment.

What is the price-to-earnings ratio? It's the price of the stock divided by its earnings. Stock price: $14; earnings: $1. The P-E ratio then is 14.

What are high yield/junk bonds? Junk bonds are called junk for a reason. They are really risky, but because of this risk, they can pay very well. They also have low credit ratings. The reason they are so risky is because the companies that issue them are usually in some sort of financial distress, and it’s believed that they will struggle to repay them. So they promise high interest payments to obtain the income from bond purchases.

You've seen routing numbers on checks before, but what do they actually do? Hit play to find out.

What is an Agency Relationship? An agency relationship allows an agent to act on behalf of the individual or company who hires them. This type of relationship is common in the financial world because individuals who hire financial advisors or fund managers to handle their finances are essentially creating agency relationships.

A phishing scam is a con in which someone is contacted online in an attempt to procure money or personal information. We'd never do that. In fact, we love all of you so much, we want to wire you a small monetary thank you. Just send us your bank info, and we'll be good to go.

In a merger, the boards and shareholders of both companies must both vote in favor of the action, and the post merger acquiring company will often include executive management from both companies in some capacity. In the case of an acquisition, the acquiring company gets a majority stake in the target company and then it becomes either a wholly owned subsidiary and otherwise retains its corporate structure, or its assets get stripped out with desirable ones retained and others discarded and sold.

What is program trading? Program trading refers to the use of computer algorithms to place and execute large volume, multiple buy and sell orders of a basket of securities simultaneously, predicated on predetermined, calculated parameters. The NYSE categorizes a basket of a minimum 15 different securities and $1 million valuation as program trading when linked to a systematic strategy.

What is a Beneficiary? Beneficiaries are named in just about every investment. The beneficiary is the person who receives the profits or distributions from any sort of financial account. In the case of a 529 college plan, the beneficiary would be the child who the owner of the account is saving for. In the case of a life insurance policy, the beneficiary is the person who receives the value of the policy should the owner pass away.

What are Hidden Assets? A hidden asset is an asset that doesn’t show up on a company’s balance sheet. Hidden assets can also be used in reference to undervalued assets that are not used to determine a company’s share price. Using these hidden assets, an investor can determine the fair value of the stock to possibly make a profit, or at least have more insight into what the stock could potentially be worth.

What is a CUSIP Number? All publicly tradable equities and fixed income securities in North America have 9 digit ID code numbers that are registered by the Committee on Uniform Securities Identification Procedures (CUSIP). These CUSIP numbers are used to identify, verify and track tradeable US and Canadian registered securities.

What is insider trading and the Securities Fraud Enforcement Act of 1988? It's nothing too complicated, if this minute long video is any indication.

Accretive: the acquisition has a net positive impact on earnings per share. Dilutive: earnings per share are negatively impacted as a result of the acquisition. So...what about neutral? Well, take the announcement of T-Mobile’s agreement to acquire Sprint, which already foreshadowed a jump in T-Mobile’s EPS. Post merger-however, T-Mobile’s solo streak may by that time have run out of steam, and the costs of integrating the two companies, who have incompatible (GSM vs. CDMA) systems, might eat into any initial EPS bump that analysts may be calculating. If EPS remains the same as previous quarters during the integration period, the acquisition would be described as neutral, but strategically advantageous within the industry and potentially accretive.

How does a board of directors function? Public companies, as well as some private corporations and non profit groups, have a board of directors. Usually odd in number for voting periods, a board of directors is intended to serve as a fiduciary for shareholder and management interests and votes on corporate policies on their behalf. Inside directors usually are directors who also are executives of the company. Outside directors are often successful professionals in related fields who are paid to participate in board meetings and draw upon their expertise to advise the company.

What are the economics of government lobbying? Lobbying, which is the act of organizing campaigns and other kinds of activities in order to pressure and influence government officials in matters of policy that are important to the lobbying group’s supporters, is a big business. Billions of dollars are spent annually, and tens of thousands of people are employed as lobbyists in the USA.