A term indicating the last-minute infusion of cash into a company about to go bankrupt. Airports foam runways prior to an imminent crash landing to help reduce friction and sparks. Just as foaming the runway is a last stand against a horrible crash landing, a company obtaining a loan to stay in business is a last stand against going under."Foam the runway" is also a general statement in business, which refers to preparing for a potential disaster. If a company is in trouble before having to obtain an infusion of cash, foaming the runway will usually just delay the inevitable. Prudent investors should not assume that a cash infusion will save a company, and should carefully review all available information before making an investment decision.
A sovereign wealth fund established on the Pacific island of Kiribati. The fund was created in order to manage earnings stemming from the county's phosphate mining industry, which at the time of establishment accounted for over half of Kiribati's government revenue, and was the country's largest export. |||The Revenue Equalization Reserve Fund was established in 1956. By the late 1970s the country had exhausted its phosphate deposits, and the per capita GDP was cut in half between 1979 and 1981. Since that time, Kiribati has been largely dependent on foreign aid, tourism and the sale of fishing rights.
An investment fund featuring an asset mix determined by the level of risk and return that is appropriate for an individual investor. Factors that determine this mix include an investor's age, level of risk aversion, the investment's purpose and the length of time until the principal will be withdrawn. Lifestyle funds can feature conservative, moderate or aggressive growth strategies. Aggressive growth lifestyle funds are targeted to investors in their late 20s, while conservative growth lifestyle funds are targeted to investors in their late 50s. Lifestyle funds are designed to be the main investment in a person's portfolio. The purpose of a lifestyle fund may be defeated if other funds are chosen at the same time because the asset allocation ratio will become distorted.
A market that supports the transaction of derivatives on which the underlying commodities are limited to excluded commodities or assets with an inexhaustible, deliverable supply. A derivatives transaction execution facility allows for the transaction of commodities with no cash market; however, all products listed on the exchange must not be susceptible to manipulation. DTEFs must be registered with the Commodity Futures Trading Commission, which grants them fewer regulatory requirements than other contract markets. |||Derivatives transaction execution facilities are not open to retail investors. To trade on this exchange, an investor must belong to an eligible commercial entity, be an eligible contract participant or transact through a futures commission merchant. DTEFs provide a venue for the trading of excluded commodities, such as interest or exchange rates and other derivatives.
The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This flight is usually caused by uncertainty in the financial or international markets. However, at other times, this move may be an instance of investors cutting back on the more volatile investments for the conservative ones (i.e. diversifying) without much consideration of the international markets. For example, during a bear market investors will often move their money out of equities and into government securities and money market funds. Another example is investors moving investments from high-risk countries with political unrest and volatile economic conditions to less risky markets of other countries. One indication of a flight to quality is a dramatic fall of the yield on government securities, which is a result of the increased demand for them.
An agreement between a buyer and seller whereby a commodity purchase occurs at a specific price above a futures contract for an identical grade and quantity. Also known as a call sale, this agreement gives the buyer the option to fix the price of the commodity by either purchasing a future from the seller or indicating to the seller a time in which the price of the transaction will be set. A buyer's call is used instead of buying the commodity on the spot market because of the possibility that its price will depreciate. Suppose, for example, I was in need of ten barrels of sweet crude today. I could purchase these barrels on the spot market for $50/barrel or enter into a buyer's call with an oil company that presently has the ten barrels but doesn't require them for another six months. By entering into the call, I would either offer to buy a six-month future contract for the oil company in exchange for the barrels of oil or offer to buy ten barrels of oil some point in the future at a fixed market price. The oil company is able to make a profit from my purchase while still obtaining their required amount of oil six months in the future. And I benefit from obtaining the oil today
A special category of balanced, or asset-allocation, mutual fund in which the proportional representation of an asset class in a fund's portfolio is automatically adjusted during the course of the fund's time horizon. The automatic portfolio adjustment run from a position of higher risk to one of lower risk as the investor ages and/or nears retirement. Also referred to as "age-based funds". Proponents of life-cycle funds cite the convenience to investors of putting their investing activities on autopilot through the use of just one fund, which is managed for them. On the other hand, critics of these funds say that their "one size fits all" approach is suspect. For investors who don't want to take responsibility for their retirement investing, a life-cycle fund may be appropriate. However, for those who want to take the time and make the effort to direct the management of their investments, life-cycle funds should be avoided.
A service, used by underwriting firms, that provides a method of tracking the exact path of purchases and sales of newly issued securities. |||Underwriters don't like flippers. DCTT attempts to deter premature selling of IPOs. The underwriters may even implement penalties against the flipper.
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