The process of determining the current worth of a portfolio, company, investment, or balance sheet item. Taobiz explains Asset Valuation The tools used for asset valuation include quantitative methods and statistics, financial statement analysis, ratio analysis, fundamental analysis, and valuation economics.
An automated system designed to document and report the clearing of trades in the Nasdaq market. Taobiz explains Automated Confirmation Transaction Service - ACT All NASD members are required to participate in ACT. ACT provides faster access to trade information, it increases the efficiency of trade reconciliation and back-office transactions, and it also offers online access to the status of all trade entries.
A market in which buyers enter competitive bids and sellers enter competitive offers at the same time. The price a stock is traded represents the highest price that a buyer is willing to pay and the lowest price that a seller is willing to sell at. Matching bids and offers are then paired together and the orders are executed. Taobiz explains Auction Market The New York Stock Exchange (NYSE) is an example of an auction market. Auction markets differ from over the counter where trades are negotiated. For example, 4 buyers want to buy a share of XYZ and make the following bids: $10.00, 10.02, 10.03 and $10.06. Conversely, there are 4 sellers that desire to sell XYZ and they submitted offers to sell their shares at the following prices: $10.06, 10.09, 10.12 and $10.13. In this scenario, the individuals that made bids/offers for XYZ at $10.06 will have their orders executed. All remaining orders will not immediately be executed and the current price of XYZ will then be $10.06.
The tendency of stocks selected by a quantitative technique or model to have similar fundamental characteristics, such as high yields and low earnings valuations. Most investing models that provide investment choices as an output will have to establish parameters that, by definition, will exclude certain stocks and offer ones with similar traits in return. Taobiz explains Attribute Bias An investing or research technique that produces choices with attribute bias is not necessarily a bad thing; the biggest danger is that the stocks may correlate closely in their returns, eliminating some of the value of a diversified portfolio. One thing in particular to watch out for is investing in several companies operating in the same industry, as industry peers will often have similar fundamental values.
An equity-based exotic option from the family of mountain range options. Atlas options have a payout that is based on the performance of the underlying securities, which are stocks. At maturity, some of the best- and worst-performing stocks are removed from this group of underlying securities, at which point the payout is calculated on the remainder of the securities. Taobiz explains Atlas Options Atlas options are typically only traded by sophisticated institutional investors who have the resources and risk tolerance to accept what can be an extremely complex security. As the time to maturity draws nearer, the price or value of an Atlas option may become more readily apparent as the top and bottom performers clearly separate themselves from the rest of the pack. These options were first introduced in the late 1990s, and were made up of European-based equities. Most are created as call options, with long terms to maturity.
AQO is a number that summarizes analysts' ratings for a particular company. Taobiz explains Average Qualitative Opinion - AQO The AQO is a way of expressing Buy/Hold/Sell opinions numerically.
The process of buying additional shares in a company at lower prices than you originally purchased. This brings the average price you've paid for all your shares down. Taobiz explains Average Down Sometimes this is a good strategy, other times it's better to sell off a beaten down stock rather than buying more shares.
A way of calculating cost basis when figuring out gains or losses from a sale of mutual fund shares. This is done by adding up the number of shares owned as well as the total dollar amount of the shares; the dollar amount is divided by the number of shares. This number (the average cost basis) is then multiplied by the number of shares sold and compared to the actual sale amount to compute a gain or loss. Taobiz explains Average Cost Basis Method Many mutual fund companies include an average basis number on the confirmation statement, which is mailed to the client whenever shares are purchased or redeemed. The shareholder is not required to use this method.