Investment Terms

A special purpose acquisition company is a company without commercial operations and is formed strictly to raise capital through an initial public offering for the purpose of acquiring or merging with an existing company.
Also known as blank check companies, SPACs have existed for decades, but their popularity has soared in recent years. In 2020, 247 SPACs were created with $80 billion invested, and in 2021, there were a record 613 SPAC IPOs. By comparison, only 59 SPACs came to market in 2019
SPACs are commonly formed by investors or sponsors with expertise in a particular industry or business sector, and they pursue deals in that area.
SPAC founders may have an acquisition target in mind, but they don’t identify that target to avoid disclosures during the IPO process.

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Tax-loss harvesting is the timely selling of securities at a loss in order to offset the amount of capital gains tax due on the sale of other securities at a profit.
This strategy is most often used to limit the amount of taxes due on short-term capital gains, which are generally taxed at a higher rate than long-term capital gains. However, the method may also offset long-term capital gains.
This strategy can help preserve the value of the investor’s portfolio while reducing the cost of capital gains taxes.

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A donor-advised fund is a private fund administered by a third party and created for the purpose of managing charitable donations on behalf of an organization, a family, or an individual.
Donor-advised funds have become increasingly popular primarily because they offer the donor greater ease of administration while still allowing them to maintain significant control over the placement and distribution of charitable gifts.
In addition, companies are able to offer this service to clients with fewer transaction costs than if the funds were handled privately.
Donor-advised funds democratize philanthropy by aggregating multiple donors and processing high numbers of charitable transactions.

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A hardship withdrawal is an emergency removal of funds from a retirement plan, sought in response to what the IRS terms "an immediate and heavy financial need.
This type of special distribution may be allowed without penalty from such plans as a traditional IRA or a 401k, provided the withdrawal meets certain criteria regarding the need for the funds and their amount.
However, even if penalties are waived (notably, the 10% penalty for withdrawals made before age 59½), the withdrawal will still be subject to standard income tax.
Hardship withdrawals can provide needed funds in an emergency—without a credit check—but they should be used very sparingly and only if all other alternatives have been tried or dismissed.
By exposing funds held in a tax-sheltered account to income tax, a hardship withdrawal is likely to boost your tax bill for the year.

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The Dow Jones Industrial Average also known as the Dow 30, is a stock market index that tracks 30 large, publicly-owned blue-chip companies trading on the New York Stock Exchange and Nasdaq.
The Dow Jones is named after Charles Dow, who created the index in 1896 along with his business partner Edward Jones.
The DJIA is the second-oldest U.S. market index; the first was the Dow Jones Transportation Average (DJTA).
The DJIA was designed to serve as a proxy for the health of the broader U.S. economy. Often referred to simply as the Dow, the DJIA is one of the most-watched stock market indexes in the world. While the Dow includes a range of companies, all can be described as blue-chip companies with consistently stable earnings.

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The Federal National Mortgage Association typically known as Fannie Mae, is a government-sponsored enterprise founded in 1938 by Congress during the Great Depression as part of the New Deal.
It was established to stimulate the housing market by making more mortgages available to moderate- to low-income borrowers.
Fannie Mae does not originate or provide mortgages to borrowers. But it does purchase and guarantee them through the secondary mortgage market. In fact, it's one of two of the largest purchasers of mortgages on the secondary market.
Fannie Mae is a government-sponsored enterprise that makes mortgages available to low- and moderate-income borrowers.
It does not provide loans, but backs or guarantees them in the secondary mortgage market.
Fannie Mae was bailed out by the U.S. government following the financial crisis and was delisted from the NYSE.

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A cold wallet is used offline for storing bitcoins or other cryptocurrencies. With a cold wallet, also originally known as cold storage, the digital wallet is stored on a platform not connected to the internet, thereby protecting the wallet from unauthorized access, cyber hacks, and other vulnerabilities that a system connected to the internet is susceptible to.
Cold storage methods are useful for individual investors, but cryptocurrency exchanges and companies involved in the crypto space also make use of this type of wallet.
Cold storage also can refer more broadly to other modes of operation for storing inactive data, such as data for regulatory compliance, video, photographs, and backup information.
Most cryptocurrency wallets are digital, but hackers can sometimes gain access to these storage tools in spite of security measures designed to prevent theft.

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Bitcoin Cash is a cryptocurrency that was created and launched to bring decentralization back to cryptocurrency.
It is the result of a 2017 Bitcoin "hard fork," which occurs when an existing blockchain splits into two. Bitcoin Cash allows a greater number of transactions in a single block than Bitcoin, which should lower fees and transaction times.
Bitcoin Cash is the result of a Bitcoin hard fork that happened in August 2017.
Bitcoin Cash was created to allow more transactions in a single block, theoretically decreasing the fees and transaction times.
Despite their philosophical differences, Bitcoin Cash and Bitcoin share several technical similarities: They use the same consensus mechanism and have capped their supply at 21 million coins.
Bitcoin Cash continues to trade—at a fraction of Bitcoin's price—but has yet to achieve widespread consumer acceptance as a form of payment.

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Principal trades involve a brokerage's own inventory of securities, while agency trading involves trading with another investor, potentially at another brokerage.
Principal trading occurs when a brokerage buys securities in the secondary market, holds these securities for a period of time, and then sells them.
The purpose behind principal trading is for firms (also referred to as dealers) to create profits for their own portfolios through price appreciation.
So, when an investor buys and sells stock through a brokerage firm that acts as the principal, the firm will use its own inventory on hand to fill the order for the client.
With this method, brokerage firms earn extra income (over and above the commissions charged) by making money from the bid-ask spread as well.

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Comparable store sales refer to the revenue generated by a retail location in the most recent accounting period relative to the revenue it generated in a similar period in the past.
Investors and analysts reviewing a retail company’s financial statements rely on comparable store sales to provide a picture of how established stores have performed over time relative to the performance of new stores.
Comparable store sales is a measure of sales growth and revenue from a company’s store operations.
Comparable store sales are most commonly used to compare the most recent year's holiday shopping season to the previous year's.

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