Investment Terms

Absolute advantage is the ability of an individual, company, region, or country to produce a greater quantity of a good or service with the same quantity of inputs per unit of time or to produce the same quantity of a good or service per unit of time using a lesser quantity of inputs, than its competitors.
Absolute advantage can be accomplished by creating the good or service at a lower absolute cost per unit using a smaller number of inputs, or by a more efficient process.
Absolute advantage explains why it makes sense for individuals, businesses, and countries to trade with each other. Since each has advantages in producing certain goods and services, both entities can benefit from the exchange.

Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

Pro rata is a Latin term used to describe a proportionate allocation. It essentially translates to proportion, which means a process where whatever is being allocated will be distributed in equal portions.
If something is given out to people on a pro-rata basis, it means assigning an amount to one person according to their share of the whole.
While a pro-rata calculation can be used to determine the appropriate portions of any given whole, it is often used in business finance.
Pro rata is also used to determine how much of a distribution from a qualified retirement account is taxable when the account contains before and after-tax dollars


Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

A put option is a contract giving the option buyer the right, but not the obligation, to sell—or sell short—a specified amount of an underlying security at a predetermined price within a specified time frame.
This predetermined price at which the buyer of the put option can sell the underlying security is called the strike price.
Put options are traded on various underlying assets, including stocks, currencies, bonds, commodities, futures, and indexes.
A put option can be contrasted with a call option, which gives the holder the right to buy the underlying security at a specified price, either on or before the expiration date of the option contract.

Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

A prospectus is a formal document required by and filed with the Securities and Exchange Commission that provides details about an investment offering to the public. A prospectus is filed for offerings of stocks, bonds, and mutual funds.
The prospectus can help investors make more informed investment decisions because it contains a host of relevant information about the investment or security.
In areas other than investing, a prospectus is a printed document that advertises or describes an offering such as a school, commercial enterprise, forthcoming book, etc. All forms of prospectus exist to attract or inform clients, members, buyers, or investors.
Companies that wish to offer bonds or stock for sale to the public must file a prospectus with the Securities and Exchange Commission as part of the registration process.

Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

Porter's Five Forces is a model that identifies and analyzes five competitive forces that shape every industry and helps determine an industry's weaknesses and strengths.
Five Forces analysis is frequently used to identify an industry's structure to determine corporate strategy.
Porter's model can be applied to any segment of the economy to understand the level of competition within the industry and enhance a company's long-term profitability. Porter's 5 forces are:
Competition in the industry
Potential of new entrants into the industry
Power of suppliers
Power of customers
Threat of substitute products


Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

The Phillips curve is an economic theory that inflation and unemployment have a stable and inverse relationship. Developed by William Phillips, it claims that with economic growth comes inflation, which in turn should lead to more jobs and less unemployment.
The original concept of the Phillips curve has been somewhat disproven due to the occurrence of stagflation in the 1970s, when there were high levels of both inflation and unemployment
The concept behind the Phillips curve states the change in unemployment within an economy has a predictable effect on price inflation.
The inverse relationship between unemployment and inflation is depicted as a downward-sloping, concave curve, with inflation on the Y-axis and unemployment on the X-axis. Increasing inflation decreases unemployment, and vice versa.

Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

Operating income is an accounting figure that measures the amount of profit realized from a business's operations after deducting operating expenses such as wages, depreciation, and cost of goods sold.
Operating income also called income from operations takes a company's gross income, which is equivalent to total revenue minus COGS, and subtracts all operating expenses. A business's operating expenses are costs incurred from normal operating activities and include items such as office supplies and utilities.
Operating income is a measurement that shows how much of a company's revenue will eventually become profits considering its business operations. It's a measurement of what money a company makes only looking at the strictly operational aspect of its company.
Operating income factors in two major types of expenses: cost of goods sold and operating expenses.

Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

Fringe benefits are additions to compensation that companies give their employees. Some fringe benefits are given universally to all employees of a company while others may be offered only to those at executive levels.
Some benefits are awarded to compensate employees for costs related to their work while others are geared to general job satisfaction.
Employers use fringe benefits to help them recruit, motivate, and keep high-quality people.
Common fringe benefits are basic items often included in hiring packages. These include health insurance, life insurance, tuition assistance, childcare reimbursement, cafeteria subsidies, below-market loans, employee discounts, employee stock options, and personal use of a company-owned vehicle.


Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

Futures are derivative financial contracts that obligate parties to buy or sell an asset at a predetermined future date and price.
The buyer must purchase or the seller must sell the underlying asset at the set price, regardless of the current market price at the expiration date.
Underlying assets include physical commodities and financial instruments. Futures contracts detail the quantity of the underlying asset and are standardized to facilitate trading on a futures exchange. Futures can be used for hedging or trade speculation.
Futures—also called futures contracts—allow traders to lock in the price of the underlying asset or commodity. These contracts have expiration dates and set prices that are known upfront. Futures are identified by their expiration month.

Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.

Free carrier is a trade term dictating that a seller of goods is responsible for the delivery of those goods to a destination specified by the buyer.
When used in trade, the word free means the seller has an obligation to deliver goods to a named place for transfer to a carrier.
The destination is typically an airport, shipping terminal, warehouse, or other location where the carrier operates. It might even be the seller's business location.
The seller includes transportation costs in its price and assumes the risk of loss until the carrier receives the goods. At this point, the buyer assumes all responsibility.

Become a supporter of this podcast: https://www.spreaker.com/podcast/investment-terms--4432332/support.