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Active investing is where the investor is more involved with the security/stock picking and when
to buy and sell. This style of investing requires substantially more ongoing research and
discipline (emotional and logical). Although you can simply pick a mutual fund to do the active
investing for you, not all active mutual fund will perform well. In fact, as mentioned before,
most active mutual funds will not even beat the index (after fees).
There are many types of active investing styles. The ones listed below do not account for
trading strategies, but more along the lines of longer term buy and hold.page 185
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Active management (also called active investing) refers to a portfolio
management strategy where the manager makes specific investments with the
goal of outperforming an investment benchmark index.
Lock In
To close a position such that the profit or loss from an investment is realized. For
example, if an investor buys a stock at $5 per share and the price goes to $10, the
investor has a paper profit of $5 per share. However, if the investor waits to sell the
stock until the price drops to $8, the locked in profit is only $3 per share. Investors
often wait before locking in substantial profits or losses, as locking in a profit may
result in higher taxation, while locking in a loss removes the possibility that the
investment can be recovered.
Farlex Financial Dictionary. 2012 Farlex, Inc. All Rights Reserved
Lock in may be used in foreign exchange transaction, such as forward contracts, futures contracts,
currency swaps, and currency options contracts.
Lock-in
A specified time period that an investor is locked into an investment. An example
would be a period following a flotation when major shareholders agree not to sell
their holdings. The objective is to give investors confidence that the management
and key shareholders do not intend to cash in their stock the moment the market
opens. Most flotation prospectuses have get-out clauses, the most common being
that if the company is the subject of a takeover bid, shareholders are allowed to
sell.
.
1.Period during which a loan cannot be paid-off earlier than scheduled without incurring
penalties. Its objective is to generate a certain minimum return on the sums advanced that covers
the lender's lending and loan administration expenses.
2.Period for which a lender agrees to hold steady the agreed upon interest rate on the loan
irrespective of the market rate. Also called lockup period.
Read more: http://www.businessdictionary.com/definition/lock-in-period.html#ixzz3agOL0neN
Tobin's q
From Wikipedia, the free encyclopedia
Tobin's q[1] is the ratio between a physical asset's market value and its replacement value. It was
introduced in 1968 by James Tobin and William Brainard,[1] although the use of the letter "q" did
not appear until Tobin's 1969 article "A general equilibrium approach to monetary theory".[2][3]
Tobin (1969) writes
One, the numerator, is the market valuation: the going price in the market for exchanging
existing assets. The other, the denominator, is the replacement or reproduction cost: the price in
the market for the newly produced commodities. We believe that this ratio has considerable
macroeconomic significance and usefulness, as the nexus between financial markets and markets
for goods and services.[4]
We measure firms groTobins Q(called Q)followingMcConnell and Servaes (1990):
Tobins Q = (Market Value of Equity + Book Value of Debt ) / Book Value of Assets
We use Tobins q, measured as the ratio of the market value of the firms assets to their book value, as our
measure of growth opportunities.
Positive Carry
Positive carry
Related: Net financing cost
Copyright 2012, Campbell R. Harvey. All Rights Reserved.
Positive Carry
A situation in which an investor has two opposite positions and in which the cash
inflow from one position exceeds the cash outflow of the other. For example, if one
borrows money, owes 10% interest, and then promptly lends the same amount of
money at 12% interest, then the borrower/lender has a positive carry.
Farlex Financial Dictionary. 2012 Farlex, Inc. All Rights Reserved
positive carry
The current net income from an investment
position when the current income from the
investment exceeds its cost of carry. A Treasury
bond with a current yield of 14% has a positive
carry if its purchase can be financed at 12%.
Compare negative carry. See also carrying charges.
DEFINITION of 'Positive Carry'
A strategy of holding two offsetting positions, one of which creates an incoming cashflow that is
greater than the obligations of the other.
When the cost of borrowing money to pay for a securities purchase is less than the yield on the
securities. For instance, if funds are borrowed at a cost of 6 percent, and the stock or bond
investment yields 8 percent, there is a positive carry. The inverse is a negative carry.
ex dividend (exclusive of dividends).
Ex-Dividend
Also found in: Dictionary/thesaurus, Legal, Acronyms, Wikipedia.
Ex-dividend
This literally means "without <dividend< a="">." The buyer of </dividend<>shares
when they are quoted ex-dividend is not entitled to receive a declared <dividend<
a="">. It is the interval between the </dividend<> record date and the payment
date during which the stock trades without its dividend-the buyer of a stock selling
ex-dividend does not receive the recently declared dividend. Antithesis of cum
dividend (with dividend).
Copyright 2012, Campbell R. Harvey. All Rights Reserved.
Ex-Dividend
The sale of a security after a dividend has been announced but before it has been
distributed. When a security is sold ex-dividend, the dividend remains with the
seller. Selling ex-dividend almost invariably reduces the price for which the security
is sold by the amount of the dividend. See also: Cum dividend, Ex-dividend date.
Farlex Financial Dictionary. 2012 Farlex, Inc. All Rights Reserved
ex-dividend
Used to refer to a stock no longer carrying the right to the next dividend payment
because the settlement date occurs after the record date. If, for example, GenCorp
common stock goes ex-dividend on May 31, an investor purchasing the stock on or
after that date will not receive the next dividend check. A stock trading ex-dividend
is indicated in stock transaction tables by the symbol x in the volume column.
Compare cum dividend.
Case Study A stock's ex-dividend date should be of more interest to an investor
than the dividend record date or dividend payment date. A stock must be purchased
one day prior to the ex-dividend date for the buyer to claim a dividend that has
been announced but not yet paid. Buy shares of stock on the ex-dividend date and
the seller, not you, will receive the upcoming dividend. The ex-dividend date is two
business days prior to the record date because three days are required for regular
settlement of a stock transaction. Buy stock on Tuesday and you will be listed as the
owner of record on Friday, the day that payment is required for the purchase. If a
firm's directors have declared that a dividend will be paid to stockholders of record
on Friday, you must buy the stock the stock on Tuesday in order to have a right to
the dividend. In this case the ex-dividend date is Wednesday, two days prior to the
record date. Relevant dates for the stock of international petroleum giant BP are
illustrated below.
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Announcement date
Feb 13
May 8
August 7
Nov 6
Ex-dividend date
Feb 21
May 16
August 15
Nov 14
Record date
Feb 23
May 18
August 17
Nov 16
Payment date
March 19
June 11
Sept 10
Dec 10
Notice that the record date follows the ex-dividend date by two business days for
each quarterly dividend. In the first quarter you must have purchased the stock by
February 20 to be listed as a stockholder on February 23 and receive the dividend
on March 19. Purchasing the stock on February 21 meant you would not have been
listed as a stockholder of record until February 24, one day beyond when the
company determined who was to receive the dividend. A weekend or holiday
between the ex-dividend and record dates lengthens the time difference to four
days or three days, respectively. The schedule for BP indicates owners of the stock
on the day prior to the ex-dividend date must wait nearly a month for actual
payment of the dividend.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by
David L. Scott. Copyright 2003 by Houghton Mifflin Company. Published by
Houghton Mifflin Company. All rights reserved.
Ex-dividend.
You must own a security by the record date the company sets to be entitled to the dividend it will
pay on the payable date.
The period between those dates -- anywhere from a week to a month or more -- during which
new investors in the security are not entitled to that dividend is called the ex-dividend period.
On the day the ex-dividend period begins, which is the first trade date that will settle after the
record date, the stock is said to go ex-dividend.
Generally, the price of a stock rises in relation to the amount of the anticipated dividend as the
ex-dividend date approaches. It drops back on the first day of the ex-dividend period to reflect
the amount that is being paid out as dividend.
Dictionary of Financial Terms. Copyright 2008 Lightbulb Press, Inc. All Rights
Reserved.
Ex-Dividend
What Does Ex-Dividend Mean?
A classification assigned to stock when a declared dividend belongs to the seller rather than the
buyer at the time of a trade. A stock is given ex-dividend status if a person has been confirmed by
the company to receive the dividend payment.
Investopedia explains Ex-Dividend
A stock trades ex-dividend on or after the ex-dividend date (exdate). At this point, the person
who owns the security on the ex-dividend date will be awarded the payment regardless of who
currently holds the stock. After the ex-date has been declared, the stock usually drops in price by
the amount of the expected dividend; the stock is trading without the dividend.
DEFINITION of 'Ex-Dividend'
A classification of trading shares when a declared dividend belongs to the seller
rather than the buyer. A stock will be given ex-dividend status if a person has been
confirmed by the company to receive the dividend payment.
Why it Matters:
In a nutshell, if you buy a stock before the ex-dividend date, then you will receive the next
upcoming dividend payment. If you purchase the stock on or after the ex-dividend date, you will
not receive the dividend.
With a large dividend, the price of a stock may move up by the dollar amount of the dividend as
the ex-dividend date approaches and then fall by that amount after the ex-dividend date. A stock
that has gone ex-dividend is marked with an "x" in newspapers on that day.