A category of stocks that relate to producing goods used in construction and manufacturing. This sector includes companies involved with aerospace and defense, industrial machinery, tools, lumber production, construction, cement and metal fabrication. Taobiz explains Industrial Goods Sector Performance in the industrial goods sector is largely driven by supply and demand for building construction - residential, commercial and industrial - as well as the demand for manufactured products. When the economy contracts and consumers save more and spend less, activity in this sector drops because companies will postpone expansion and produce fewer goods. The performance of the industrial goods sector closely follows the performance of the S&P 500.
A technique for determining the fair value of a particular bond. Bond valuation includes calculating the present value of the bond's future interest payments, also known as its cash flow, and the bond's value upon maturity, also known as its face value or par value. Because a bond's par value and interest payments are fixed, an investor uses bond valuation to determine what rate of return is required for an investment in a particular bond to be worthwhile. |||Bond valuation is only one of the factors investors consider in determining whether to invest in a particular bond. Other important considerations are: the issuing company's creditworthiness, which determines whether a bond is investment-grade or junk; the bond's price appreciation potential, as determined by the issuing company's growth prospects; and prevailing market interest rates and whether they are projected to go up or down in the future.
Material information about a company's activities that has not been disclosed to the public. Taobiz explains Insider Information It is illegal for anyone with access to insider information to make trades based on it.
A yield-rate environment in which long-term rates are decreasing at a rate faster than short-term rates. This causes the yield curve to flatten as the short-term and long-term rates start to converge. |||When the yield curve is moving, it is either steepening or flattening. These fluctuations occur due to investor demand, changes in interest rates and institutional investors trading large blocks of fixed-income securities. If the yield curve is exhibiting bull flattener behavior, the spread between the long-term rate and the short-term rate is getting smaller because long-term rates are decreasing as short-term rates are increasing. This could occur as more investors choose long-term bonds relative to short-term bonds, which drives long-term bond prices up and reduces yields.
The purchase of shares of stock in a corporation by someone who is employed by the company. Insider buying should not be confused with insider trading. Insider trading refers to corporate insiders trading on private information, an activity that is illegal. However, insider buying is based on public information in a situation where insiders believe that their stock is undervalued. Taobiz explains Insider Buying Insider trading is often a temptation faced by corporate officers and board members who know of new products or inventions that could cause the stock price to rise. Those in this position must carefully adhere to special regulations when purchasing stock in their companies to avoid penalties. On the other hand, insider trading typically occurs when employees believe that the public is not valuing their stocks properly. Because insider transactions are public information, knowing that insiders are purchasing stock can signal future stock appreciation.
The highest bid and lowest offer price for a security quoted among all of the market makers competing in a security. Taobiz explains Inside Quote This is also known as the inside spread.
A bond that is likely to increase in value in a bull market, when interest rates are declining. Most bonds tend to increase in value when interest rates decline, but bull bonds refer to types of bonds that do especially well in this environment. |||A common example of a bull bond is the principal only (PO) strip mortgage-backed security. Whereas most bonds will increase in value in a declining rate market, mortgage-backed securities perform especially well. POs are mortgage securities created by separating principal payments from interest payments collected in a pool of mortgage securities. The principal payments are then combined to form a mortgage pool. PO mortgage securities do well in a falling rate market because mortgage holders refinance their loans at lower interest rates. Investors are repaid their original investment more quickly, increasing the rate of return for the mortgage-backed security.
The highest quoted bid and the lowest offer price among competing market makers in a security trading on the Nasdaq market. Taobiz explains Inside Market This is another term for the market maker spread.
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