The Money exchange

Category: glossary , Asked by: U. Koch from Dublin, Ireland

A: A theory that relates how stories published in the media influence or amplify current trends. Borrowers or investors will read an article and be influenced to act quickly on the news. The media effect is often seen in the mortgage market, when prepayment rates can sharply increase following specific news stories. The media effect causes increases in the number of refinanced mortgages during low interest rate periods. For example, let's say The New York Times publishes a story revealing a drop in interest rates and how it relates to mortgages. The media effect dictates that those who read the article are more likely to increase the prepayment rates on their mortgages and refinance according to the story.

Category: glossary , Asked by: Cory L. From Germany

A: With-profits and investment-linked funds combined in the same contract with the choice of switching between them.

Category: glossary , Asked by: S. I. From United States

A: "market arbitrage " is Purchasing and selling the same security at the same time in different markets to take advantage of a price difference between the two separate markets. An arbitrageur would short sell the higher priced stock and buy the lower priced one. The profit is the spread between the two assets.

Category: general , Asked by: G. S. From Ireland

A: We think the best place for your purpose is "Dukascopy". The customer service line they've got is terrific. It takes but a few seconds to reach them, and they're quite perfect.

Category: glossary , Asked by: Juliana S. From Clarksville, United States

A: A loan not secured by an underlying asset or collateral. Unsecured debt is the opposite of secured debt. The concept of unsecured debt is easily understood when its opposite is considered. A good example of secured debt would be a mortgage. The bank loans out money to a lender who uses it to buy a house; the house becomes the asset backing the loan. In the case of unsecured debt, a lender loans money without the security that an underlying asset provides. For this reason, unsecured debt carries more risk for the lender, which in turn makes the loan more expensive. The more additional risk that a lender must take on, the higher the rate of interest a borrower must pay, making unsecured loans subject to higher rates.

Category: glossary , Asked by: R. Snider from United Kingdom

A: A reduction in the number of a corporation's shares outstanding that increases the par value of its stock or its earnings per share. The market value of the total number of shares (market capitalization) remains the same. For example, a 1-for-2 reverse split means you get half as many shares, but at twice the price. It's usually a bad sign if a company is forced to reverse split - firms do it to make their stock look more valuable when, in fact, nothing has changed. A company may also do a reverse split to avoid being delisted.

Category: glossary , Asked by: R. Rivera from United Kingdom

A: A technical indicator that measures the percentage change between the most recent price and the price "n" periods in the past. It is calculated by using the following formula: (Closing Price Today - Closing Price "n" Periods Ago) / Closing Price "n" Periods Ago ROC is classed as a price momentum indicator or a velocity indicator because it measures the rate of change or the strength of momentum of change. Many traders use a value greater than zero to indicate an increase in upward momentum and a value less than zero to indicate an increase in selling pressure. However, some of the most valuable signals are generated when the price of the asset and the ROC are heading in opposite directions (known as divergence). For example, in the chart above you can see that the ROC is sloping downward while the price of the asset is increasing. This is generally an early indication that a sharp decline may be on the way.

Category: glossary , Asked by: M. O. From Austria

A: the "adjusted balance method " is A finance/accounting method where costs are based on the amount(s) owing at the end of the current time period (once credits and payments are posted). Most savings accounts use this system. Interest earned in the account is calculated at the end of the month once all the transactions have been posted.

Category: glossary , Asked by: Jaylan O. From United States

A: A general decline in prices, often caused by a reduction in the supply of money or credit. Deflation can be caused also by a decrease in government, personal or investment spending. The opposite of inflation, deflation has the side effect of increased unemployment since there is a lower level of demand in the economy, which can lead to an economic depression. Declining prices, if they persist, generally create a vicious spiral of negatives such as falling profits, closing factories, shrinking employment and incomes, and increasing defaults on loans by companies and individuals. To counter deflation, the Federal Reserve (the Fed) can use monetary policy to increase the money supply and deliberately induce rising prices, causing inflation. Rising prices provide an essential lubricant for any sustained recovery because businesses increase profits and take some of the depressive pressures off wages and debtors of every kind.

Category: glossary , Asked by: Gavin F. From United States

A: An extended period of general price decline in an individual security, an asset, or a market.