Investment Terms

A bellwether is a leading indicator of an economic trend. To investors, a bellwether is usually a company that is worth watching closely because its earnings logically suggest a larger economic trend. A company's stock may also be a bellwether if it is viewed as pointing towards an upward or downward trend in a sector.
FedEx is an example of a bellwether company. If FedEx announces a substantial increase in deliveries in a quarter, it follows that consumer spending is increasing.
More goods are being manufactured to fill more wholesale orders, more wholesale orders are being sent to retailers, and retailers are buying more to meet consumer demand.

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In the U.S, Estimated tax is a quarterly payment of taxes for the year based on the filer’s reported income for the period. Most of those required to pay taxes quarterly are small business owners, freelancers, and independent contractors.
They do not have taxes automatically withheld from their paychecks, as regular employees do.
Estimated taxes may be made for any type of taxable income that is not subject to withholding. This includes earned income, dividend income, rental income, interest income, and capital gains.

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The Beige Book is a report produced and published by the U.S. Federal Reserve. The report, referred to formally as the Summary of Commentary on Current Economic Conditions, is a qualitative review of economic conditions.
The Beige Book is published eight times each year before meetings held by the Federal Open Market Committee and is considered one of the most valuable tools at the committee’s disposal for making key decisions about the economy.

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Although the term racial wealth gap technically refers to the difference in assets owned by different racial or ethnic groups, this gap results from a range of economic factors that affect the overall economic well-being of these different groups. The term reflects disparities in access to opportunities, means of support, and resources.
Federal surveys reveal that a large disparity exists among these racial and ethnic groups in the United States. Data from the 2019 Survey of Consumer Finances examining assets such as savings, investments, retirement and pensions, and especially homeownership, reveal that White families had eight times the wealth of Black families and five times the wealth of Hispanic families. Data on "other families"—a diverse category that includes Asians, indigenous peoples, Native Hawaiians, and those who report more than one racial identification, among others—showed that they had less wealth than White families but more than Hispanic and Black families.2
The somewhat greater emphasis on the status of Black Americans corresponds to the larger number of studies and more detailed information analyzed and available with respect to it.

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A credit bureau, also known in the U.S. as a credit reporting agency, is an organization that collects and researches individual credit information and sells it to creditors for a fee, so they can make decisions about extending credit or granting loans.
Credit bureaus partner with all types of lending institutions and credit issuers to help them make loan decisions. Their primary purpose is to ensure that creditors have the information they need to make lending decisions. Typical clients for a credit bureau include banks, mortgage lenders, credit card issuers, and other personal financial lending companies.

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A business valuation is a general process of determining the economic value of a whole business or company unit. Business valuation can be used to determine the fair value of a business for a variety of reasons, including sale value, establishing partner ownership, taxation, and even divorce proceedings.
Owners will often turn to professional business evaluators for an objective estimate of the value of the business.
Business valuation is typically conducted when a company is looking to sell all or a portion of its operations or looking to merge with or acquire another company.
The valuation of a business is the process of determining the current worth of a business, using objective measures, and evaluating all aspects of the business.

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Due diligence is an investigation, audit, or review performed to confirm facts or details of a matter under consideration. In the financial world, due diligence requires an examination of financial records before entering into a proposed transaction with another party.
Securities dealers and brokers became responsible for fully disclosing material information about the instruments they were selling. Failing to disclose this information to potential investors made dealers and brokers liable for criminal prosecution.
The writers of the act recognized that requiring full disclosure left dealers and brokers vulnerable to unfair prosecution for failing to disclose a material fact they did not possess or could not have known at the time of sale.

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A credit default swap is a financial derivative that allows an investor to swap or offset his or her credit risk with that of another investor. For example, if a lender is worried that a borrower is going to default on a loan, the lender could use a CDS to offset or swap that risk.
To swap the risk of default, the lender buys a CDS from another investor who agrees to reimburse the lender in the case the borrower defaults. Most CDS contracts are maintained via an ongoing premium payment similar to the regular premiums due on an insurance policy.
Credit default swaps, or CDS, are credit derivative contracts that enable investors to swap credit risk on a company, country, or other entity with another counterparty.
Credit default swaps are the most common type of OTC credit derivatives and are often used to transfer credit exposure on fixed income products in order to hedge risk.
Credit default swaps are customized between the two counterparties involved, which makes them opaque, illiquid, and hard to track for regulators.

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The coefficient of variation is a statistical measure of the dispersion of data points in a data series around the mean. The coefficient of variation represents the ratio of the standard deviation to the mean, and it is a useful statistic for comparing the degree of variation from one data series to another, even if the means are drastically different from one another.
The coefficient of variation shows the extent of variability of data in a sample in relation to the mean of the population. In finance, the coefficient of variation allows investors to determine how much volatility, or risk, is assumed in comparison to the amount of return expected from investments. Ideally, if the coefficient of variation formula should result in a lower ratio of the standard deviation to mean return, then the better the risk-return trade-off. Note that if the expected return in the denominator is negative or zero, the coefficient of variation could be misleading.

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The average true range Is a technical analysis indicator, introduced by market technician J. Welles Wilder Jr. in his book New Concepts in Technical Trading Systems, that measures market volatility by decomposing the entire range of an asset price for that period.1
The true range indicator is taken as the greatest of the following: current high less the current low; the absolute value of the current high less the previous close; and the absolute value of the current low less the previous close. The ATR is then a moving average, generally using 14 days, of the true ranges.

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