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ASIF Final Exam (Part 4 of People and Terms Only).
ASIF Final Exam (Part 4 of People and Terms Only).
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ASIF Final Exam (Part 4 of People andTerms Only)
Consumer Sentiment
This is a statistical measurement and economic indicator of the overall health of the
economy as determined by consumer opinion. It takes into account people's feelings
toward their current financial health, the health of the economy in the short term, and
the prospects for longer-term economic growth, which directly influences their spending
activity. Surveys like the University of Michigan's Consumer Sentiment Index provide
data for this indicator.
Investor Sentiment
This reflects the collective mood or attitude of investors towards the market or a
particular security, which can influence trading behaviors. It is often considered a
contrarian indicator because extreme levels of investor sentiment could signal a market
turning point. Sentiment can be bullish (positive) or bearish (negative) and is measured
through various sentiment surveys and indicators.
Initial Jobless Claims
This is a key economic indicator that tracks the number of people filing for
unemployment benefits for the first time. It is used to gauge the health of the job market,
with increasing jobless claims indicating weaker employment conditions.
Real Estate Cap Rates
The capitalization rate is used in real estate to indicate the rate of return that is
expected to be generated on a real estate investment property. It is determined by
dividing the property's net operating income (the income after operating expenses) by
the current market value or purchase price. Cap rates vary by market, property type,
and the condition of the property.
2/20 Fee Structure
This is commonly used by hedge funds to determine the fees charged to investors. The
'2' refers to a 2% annual management fee on the total assets under management, which
is used to cover operating costs. The '20' refers to a 20% performance fee on any
profits that the fund earns beyond a predetermined benchmark.
Carried Interest
This is a form of compensation often used in private equity and hedge funds to align the
interest of the fund managers with the investors. It refers to the percentage of any
profits earned by the fund that the manager is entitled to keep, over and above any
returns that are owed to investors. This is typically a significant percentage of the fund's
profits (often around 20%).
Charging Bull Statue
, Officially titled "Charging Bull," this sculpture by artist Arturo Di Modica stands in
Bowling Green Park in New York City's Financial District. It is a symbol of financial
optimism and prosperity and is a popular tourist destination.
Short Interest
This term refers to the total number of shares of a particular stock that have been sold
short by investors but have not yet been closed out or covered. A high short interest
often indicates that investors expect the price of the stock to decline.
Float
This is the number of shares of a stock that are available for public trading. The float is
calculated by subtracting closely held shares — owned by insiders, employees, the
company's Employee Stock Ownership Plan, or major long-term shareholders — from
the total shares outstanding.
Gamma Squeeze
This is a situation in options trading where the price of the underlying stock rises quickly
as market makers who sold the options need to buy more of the underlying stock to
hedge their positions. This demand can drive the stock price up even further, creating a
feedback loop that leads to a rapid increase in the stock's price.
Contango
This market situation occurs when the futures prices for an asset are higher than the
expected future spot prices. This condition is typical in markets where there's a cost to
hold or store the commodity, like crude oil, as the futures price needs to account for
these costs.
Backwardation
This is the opposite condition to contango; it happens when the current price (or spot
price) of an underlying asset is higher than prices trading in the futures market.
Backwardation is usually a sign of a shortage or tight supply in the commodity markets.
Volatility
In financial terms, volatility is a statistical measure of the dispersion of returns for a
given security or market index. High volatility means that a security's price can change
dramatically over a short time period in either direction. Low volatility means that a
security's price does not fluctuate dramatically and tends to be more steady.
Skew
In finance, skewness refers to the asymmetry or distortion from the normal distribution
in a set of data. If the curve is shifted to the left or to the right, it is said to be skewed. In
the context of options, the term 'volatility skew' refers to the pattern that implied volatility
tends to be higher for options that are in-the-money or out-of-the-money compared to
at-the-money options.
Passive Investing
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