What Is the Volume-Weighted Average Price (VWAP)?The volume-weighted average price (VWAP) is a technical analysis indicator used on intraday charts that resets at the start of every new trading session. It's a trading benchmark that represents the average price a security has traded at throughout the day, based on both volume and price. VWAP is important because it provides traders with pricing insight into both the trend and value of a security.KEY TAKEAWAYSThe volume-weighted average p...

What Is the Volume-Weighted Average Price (VWAP)?The volume-weighted average price (VWAP) is a technical analysis indicator used on intraday charts that resets at the start of every new trading session. It's a trading benchmark that represents the average price a security has traded at throughout the day, based on both volume and price. VWAP is important because it provides traders with pricing insight into both the trend and value of a security.KEY TAKEAWAYSThe volume-weighted average p...

What Is Know Your Client (KYC)?The Know Your Client or Know Your Customer is a standard in the investment industry that ensures investment advisors know detailed information about their clients' risk tolerance, investment knowledge, and financial position. KYC protects both clients and investment advisors. Clients are protected by having their investment advisor know what investments best suit their personal situations. Investment advisors are protected by knowing what they can and canno...

What Is Know Your Client (KYC)?The Know Your Client or Know Your Customer is a standard in the investment industry that ensures investment advisors know detailed information about their clients' risk tolerance, investment knowledge, and financial position. KYC protects both clients and investment advisors. Clients are protected by having their investment advisor know what investments best suit their personal situations. Investment advisors are protected by knowing what they can and canno...

What Is Negative Correlation?Negative correlation is a relationship between two variables in which one variable increases as the other decreases, and vice versa. In statistics, a perfect negative correlation is represented by the value -1.0, while a 0 indicates no correlation, and +1.0 indicates a perfect positive correlation. A perfect negative correlation means the relationship that exists between two variables is exactly opposite all of the time.KEY TAKEAWAYSNegative or inverse correlation...

What Is Negative Correlation?Negative correlation is a relationship between two variables in which one variable increases as the other decreases, and vice versa. In statistics, a perfect negative correlation is represented by the value -1.0, while a 0 indicates no correlation, and +1.0 indicates a perfect positive correlation. A perfect negative correlation means the relationship that exists between two variables is exactly opposite all of the time.KEY TAKEAWAYSNegative or inverse correlation...

What Was ZZZZ Best?ZZZZ Best was a carpet cleaning and restoration company founded by Barry Minkow that served as a front for a famous Ponzi scheme. The company went public in December 1986 and was quickly valued at over $300 million. Within just seven months of the initial public offering (IPO), however, ZZZZ Best was bankrupt and its assets were auctioned for approximately $64,000.1KEY TAKEAWAYSZZZZ Best was a company set up as a front for a Ponzi scheme.Its founder Barry Minkow engaged in ...

What Was ZZZZ Best?ZZZZ Best was a carpet cleaning and restoration company founded by Barry Minkow that served as a front for a famous Ponzi scheme. The company went public in December 1986 and was quickly valued at over $300 million. Within just seven months of the initial public offering (IPO), however, ZZZZ Best was bankrupt and its assets were auctioned for approximately $64,000.1KEY TAKEAWAYSZZZZ Best was a company set up as a front for a Ponzi scheme.Its founder Barry Minkow engaged in ...

What Is Generation X (Gen X)?Generation X, which is sometimes shortened to Gen X, is the name given to the generation of Americans born between the mid-1960s and the early-1980s. The exact years that comprise Gen X vary. Some researchers—demographers William Strauss and Neil Howe, for example—place the exact birth years from 1961 to 1981, whereas Gallup places the birth years between 1965 and 1979. But all agree that Gen X follows the baby boom generation and precedes Generation Y or the mill...

What Is Generation X (Gen X)?Generation X, which is sometimes shortened to Gen X, is the name given to the generation of Americans born between the mid-1960s and the early-1980s. The exact years that comprise Gen X vary. Some researchers—demographers William Strauss and Neil Howe, for example—place the exact birth years from 1961 to 1981, whereas Gallup places the birth years between 1965 and 1979. But all agree that Gen X follows the baby boom generation and precedes Generation Y or the mill...

What Is Internal Rate of Return (IRR)?The internal rate of return (IRR) is a metric used in financial analysis to estimate the profitability of potential investments. IRR is a discount rate that makes the net present value (NPV) of all cash flows equal to zero in a discounted cash flow analysis. IRR calculations rely on the same formula as NPV does. Keep in mind that IRR is not the actual dollar value of the project. It is the annual return that makes the NPV equal to zero. Generally speaking...

What Is Internal Rate of Return (IRR)?The internal rate of return (IRR) is a metric used in financial analysis to estimate the profitability of potential investments. IRR is a discount rate that makes the net present value (NPV) of all cash flows equal to zero in a discounted cash flow analysis. IRR calculations rely on the same formula as NPV does. Keep in mind that IRR is not the actual dollar value of the project. It is the annual return that makes the NPV equal to zero. Generally speaking...

By WILL KENTON Updated October 24, 2022 Reviewed by JULIUS MANSA Fact checked by SUZANNE KVILHAUGWhat Is the Capital Asset Pricing Model?The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk, or the general perils of investing, and expected return for assets, particularly stocks.1 It is a finance model that establishes a linear relationship between the required return on an investment and risk. The model is based on the relationship between an asset's ...

By WILL KENTON Updated October 24, 2022 Reviewed by JULIUS MANSA Fact checked by SUZANNE KVILHAUGWhat Is the Capital Asset Pricing Model?The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk, or the general perils of investing, and expected return for assets, particularly stocks.1 It is a finance model that establishes a linear relationship between the required return on an investment and risk. The model is based on the relationship between an asset's ...

The Series 7 exam licenses the holder to sell all types of securities products except commodities and futures. Known formally as the General Securities Representative Qualification Examination, the Series 7 exam and its licensing is administered by the Financial Industry Regulatory Authority (FINRA).1 Stockbrokers in the United States need to pass the Series 7 exam to obtain a license to trade. The Series 7 exam focuses on investment risk, taxation, equity, and debt instruments; packaged secu...

The Series 7 exam licenses the holder to sell all types of securities products except commodities and futures. Known formally as the General Securities Representative Qualification Examination, the Series 7 exam and its licensing is administered by the Financial Industry Regulatory Authority (FINRA).1 Stockbrokers in the United States need to pass the Series 7 exam to obtain a license to trade. The Series 7 exam focuses on investment risk, taxation, equity, and debt instruments; packaged secu...

What Is a Dividend Payout Ratio?The dividend payout ratio is the ratio of the total amount of dividends paid out to shareholders relative to the net income of the company. It is the percentage of earnings paid to shareholders via dividends. The amount that is not paid to shareholders is retained by the company to pay off debt or to reinvest in core operations. It is sometimes simply referred to as simply the payout ratio.KEY TAKEAWAYSThe dividend payout ratio is the proportion of earnings pai...

What Is a Dividend Payout Ratio?The dividend payout ratio is the ratio of the total amount of dividends paid out to shareholders relative to the net income of the company. It is the percentage of earnings paid to shareholders via dividends. The amount that is not paid to shareholders is retained by the company to pay off debt or to reinvest in core operations. It is sometimes simply referred to as simply the payout ratio.KEY TAKEAWAYSThe dividend payout ratio is the proportion of earnings pai...

What Is a Put Option?A put option (or “put”) 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 op...

What Is a Put Option?A put option (or “put”) 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 op...

What Is the Volcker Rule?The Volcker Rule is a federal regulation that generally prohibits banks from conducting certain investment activities with their own accounts and limits their dealings with hedge funds and private equity funds, also called covered funds.KEY TAKEAWAYSThe Volcker Rule prohibits banks from using their own accounts for short-term proprietary trading of securities, derivatives, and commodity futures, as well as options on any of these instruments. On June 25, 2020, Federal...

What Is the Volcker Rule?The Volcker Rule is a federal regulation that generally prohibits banks from conducting certain investment activities with their own accounts and limits their dealings with hedge funds and private equity funds, also called covered funds.KEY TAKEAWAYSThe Volcker Rule prohibits banks from using their own accounts for short-term proprietary trading of securities, derivatives, and commodity futures, as well as options on any of these instruments. On June 25, 2020, Federal...

Who Is Bernie Madoff?Bernard Lawrence "Bernie" Madoff was an American financier who executed the largest Ponzi scheme in history, defrauding thousands of investors out of tens of billions of dollars over the course of at least 17 years, and possibly longer. He was also a pioneer in electronic trading and chair of the Nasdaq in the early 1990s. He died in prison on April 14, 2021 while serving a 150-year sentence for money laundering, securities fraud and several other felonies.KEY TAKEAWAYSBe...

Who Is Bernie Madoff?Bernard Lawrence "Bernie" Madoff was an American financier who executed the largest Ponzi scheme in history, defrauding thousands of investors out of tens of billions of dollars over the course of at least 17 years, and possibly longer. He was also a pioneer in electronic trading and chair of the Nasdaq in the early 1990s. He died in prison on April 14, 2021 while serving a 150-year sentence for money laundering, securities fraud and several other felonies.KEY TAKEAWAYSBe...