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What is Arbitration? Arbitration is like court for the financial world. It is used to settle disputes between investors and their brokers. An inves...

check out some practical examples of inflation. And no, there are no balloon animals in this video. Sorry.

What is a Dissident Director? The Board of Directors of a company usually reaches a consensus the majority of the time in order to decide on polici...

"Safe harbor" refers to the notion that, if you follow a basic set of rules, you cannot be found guilty of a crime or shady dealings.

What does “Breaking the Buck” mean? Breaking the buck means that a money market fund’s value has dropped to less than $1. This happens becaus...

What was the Tax Reform Act of 1986? Hit play to find out.

What is Disinflation? Disinflation is a term used for an interim slowdown of inflation rate. For example, a reduction of inflation growth from 3.5%...

What is Collateralized Mortgage Obligation (CMO)? A CMO is a mortgage bond that consists of a large number of different individual mortgages bundle...

What are kickbacks? Well, they're things we don't get for working at Shmoop, that's for sure. Hit play to find out more.

What are ascending and descending tops and triangles? Ascending and descending tops and triangles are used to describe market performance graphs. T...

What are Capital Markets? The most often context used for “Capital Markets” is in corporate finance and investment banking, and it refers prima...

What is Above Full Employment Equilibrium? Above Full Employment Equilibrium happens when an economy is basically doing more than it realistically...

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...

What is the Alternative Minimum Tax? Alternative minimum tax is a different way of calculating tax liability. It’s only available to some individ...

The Investment Company Act of 1940 regulated and ensured fair dealings in the mutual fund industry.

How are risk and reward related? Take more risk, expect more reward. A lottery ticket might be worth a billion dollars, but if the odds are one in...

What is rescission? Hit play to find out.

Materials information is important information pertaining to a securities transaction.

Market manipulation is manipulation of the, uh... market. Like...illegally. Yeah, any sort of "scheme" is probably something you want to avoid.

What are At the Money, In the Money, Deep in the Money, and Out of the Money? At the money happens when a stock is trading at an option’s strike...

What is Counterparty Risk? Counterparty risk is the risk to either party within a transaction that the other will not or be unable to abide by the terms of the transaction agreement. This can be in the form of payment default or in providing asset or funding in accordance to the agreement schedule, or a host of other factors.

Repossession is what happens when you can't make payments on a loan. It's only slightly less terrifying than demonic possession.

"Investment grade" indicates the quality of an investment. If it's investment grade, it's, well...worth investing in. Highly rated, and not too risky.

What are lenders? Lenders are parties which can be individuals, groups or institutions that are engaged in making liquid funds that they either own or can access available to other parties in return for repayment plus interest over agreed upon time periods.

Subsidies are government donations given to industries who cannot operate profitably with the goal of keeping American citizens employed on the taxpayer's nickel.

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

When-issued is a trading condition that applies to structural changes in companies that result in a new entity with its own set of trading rules.

What is Contingent Liability? Contingent liability refers to a possible liability in the future contingent upon some other event being the trigger. This would be an accounting detail that would be either footnoted or astericked. Some examples would be on a new product’s warranty, in which the number of repairs or defect returns is unknown at the time, or if there is a lawsuit decision pending that can impact financials.

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

What are T-Notes, T-Bonds, and TIPS? T-Notes are debt securities (like bonds) that are issued by the government and mature within one to 10 years. T-Bonds are exactly the same but their maturity is longer...more than 10 years. TIPS stands for treasury inflation protected securities. The government also issues TIPS; these securities are extremely safe, because not only are they backed but the government, but they also account for inflation and protect the investor in that way.

What are unsuitable recommendations? Hit play to find out, and trust us when we say that that's a suitable recommendation.

What is Yield to Maturity? When calculating bond yields, the yield to maturity is the interest rate that an investor would ultimately accumulate if the interest coupon payment were to be reinvested on a regular fixed rate until maturity. This could be viewed as analogous to compound interest on a savings account. It is also referred to as the Internal Rate of Return.

What is After Tax Yield? After tax yield is simply how much an investment makes (or yields) after taxes have been paid. This term refers to bond yield; bonds are taxable as federal income, so after tax yield varies due to differences in tax brackets.

What is the S&P 500? It's Standard & Poor's 500 generally largest companies, with a U.S. domestic bias. The S&P 500 is usually what investors think of when they think "the market." This entity is used as an index indicator of stock performance in most calculations, and ticker SPY is the most famous index fund in this group.

Are monopolies evil? Should they be regulated? Should they be illegal? Monopolies in and of themselves, are neither good nor evil. How they conduct their business and the reasons for why they are a monopoly are subject to a variety of factors, which may or may not result in an evil situation that needs to be regulated. In a free market society, private monopolies are generally not beneficial since they can gouge the buying public, such as Theranos and its Epipen treatment, or when Rockefeller owned Standard Oil. However, in the case of Singapore Air, Singapore is a small country and having a single, national airline makes sense as other airlines can fly into Singapore. The financial, political, and security liabilities from having multiple domestic carriers in a country smaller than Manhattan far outweigh any potential benefits, so a state monopoly works in this instance.

What is due diligence? Basically, it's... doing your research. You're preparing to make an investment or purchase, and you want to make sure there are no hidden surprises about the company, property or asset you're interested in.

Comparative advantage refers to what one party sacrifices in order to create a product or service compared to another. The one who loses out less has a comparative advantage. For example, LeBron James can ostensibly play any of the 5 positions on a basketball team, as he is 6’8”, can shoot from anywhere on the court, and is strong and quick enough to rebound and defend against bruising centers or speedy point guards. Steph Curry is one of the premier 3-point shooting point guards in the NBA, but he is slight of stature and an average 6’3”. As Curry can really only play point guard or shooting guard, but at a premier level against any other teams in the NBA, he would have the comparative advantage at those positions over LeBron, who is more valuable as a small or power forward...positions at which Curry would be ineffective. LeBron would have the comparative advantage at either forward or center, as he is more valuable to a team in those positions, and his other talents and physical skill sets are otherwise wasted with him playing as a guard. Comparative advantages can be analyzed in the corporate, industry, individual or even in the military or other sectors.

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 is that it can be subdivided into tiny pieces. those pieces move anywhere they want in the same way a liquid market trades actively.

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?