Arbitrage is a trading technique in which an investor (or sometimes a computer program) finds the same instrument (like a stock) offered at a lower price in one market and a higher price in another. The investor then buys the instrument at the lower price and immediately sells it in the other market for a higher price.
Archive for the ‘Daily Definition’ Category
Arbitrage is…
Wednesday, October 6th, 2010Monetary Policy is…
Wednesday, October 6th, 2010Monetary policy is a plan of action that a Central Bank (like the Federal Reserve) sets in order to keep an economy stable. It’s really important to the overall health of a nation’s finances. The goal is to manage demand by manipulating a company’s money supply and tweaking interest rates.
Central Banks implement monetary policy using a few different methods:
- Open-Market Operations – Directly buying and selling securities in the open market
- Reserve Requirements – Setting regulations that dictate the minimum amount of money a bank must hold in reserve to back up its deposits
- Discount Rate – Changing the rate of interest banks charge other banks to borrow money
A W-2 is…
Wednesday, October 6th, 2010A W-2 is a tax form that your employer gives you to help you fill out your federal tax return correctly. Basically, the form adds up all your wages and tips from that particular job. Every employer is required to send you a W-2 before the national tax filing deadline.
But the W-2 isn’t the whole story. If you’ve made money some other way – by working as an independent consultant, for example, or by collecting earnings on your investments, you’ll have to add up and report that income by yourself.
A Category Test is…
Friday, September 17th, 2010going to tell me whether checking “user home page” puts this definition on the SGG home page or not.
Benchmarks are…
Wednesday, July 14th, 2010Benchmarks are measurements used for comparison purposes, often to track the performance of a certain set of securities. A benchmark may be a published securities index or a customized one that serves a particular investment strategy. A popular benchmark used as a reference point for comparing stock performance is Standard & Poor’s 500 Composite Index.
Sales Tax is…
Wednesday, July 14th, 2010Sales tax is a set-percentage tax applied to the selling of goods and services. For example, in New York City, the sales tax is 8.875%. So if you buy a chair for $100 in Manhattan, you’ll actually end up paying $108.89 with the sales tax included.
The Dow Jones Industrial Average is…
Wednesday, June 23rd, 2010The Dow Jones Industrial Average (or DJIA) gets its name from Charles Dow, the man who first created it in 1897. In the beginning, Mr. Dow made an index of the 11 most prosperous and most widely traded industrial stocks on the market. Currently, the Dow is made up of 30 stocks from all sectors of the market – not just industrial stocks. The companies in the current Dow index are chosen by the editors of the Wall Street Journal (which is owned by Dow Jones and Company). These stocks are intended to reflect how the largest U.S. companies are doing in the stock market.
Savings Bonds are…
Friday, June 18th, 2010Savings bonds are government-issued debt securities (doled out by the U.S. Department of the Treasury) that help pay for the U.S. government’s borrowing needs. They are supplied in face-value denominations from $50 – $10,000, with local and state tax-free interest and semiannually adjusted interest rates. Savings bonds are considered to be among the safest of investments, as they are backed by the U.S. government.
LIBOR is…
Friday, June 18th, 2010LIBOR is an acronym for the London Interbank Offered Rate, a short-term interest rate that top-quality banks offer each other for loans. The rate changes all the time, and is usually expressed as a 1, 3, or 6-month rate for U.S. dollars.
Finance is…
Friday, June 18th, 2010Finance is the practice (or science) of managing money, which includes allocating resources for spending, growing and giving. It can also refer to the system of money and investment as a whole, or to an activity that involves obtaining or providing money for some project or goal.