Cookie jar accounting is when a company messes around with its accounting books to make things look better than they are. It’s a sneaky way to hide problems and trick people into thinking the business is doing fantastic. How Companies Use the Cookie Jar Imagine the company’s money is a big jar of cookies. Usually,…
Okay, so convertible preferred stock – what the heck is it? This special type of stock some companies offer is a cross between regular ‘ole common stock and something called preferred stock. Here’s the deal: It’s Called “Preferred” For a Reason With convertible preferred stock, you’re not just an old shareholder but a VIP! Companies…
Convertible currency is money that you can easily change into a different kind of money whenever you want. It’s a type of currency that doesn’t have a lot of rules stopping you from trading it. Convertible currencies usually come from countries that have strong, stable economies. The price of convertible currencies is figured out by…
Convertible bond arbitrage sounds like a mouthful, but it’s actually a pretty straightforward idea once you break it down. Let’s say you’re an investor or hedge fund manager looking to make some money in the financial markets. One strategy you might use is called convertible bond arbitrage. Here’s how it works: you buy something called…
Currency convertibility means being able to exchange one type of money for another. When people talk about convertible currencies, they mean money that can be freely traded for other currencies. Think of British pounds, US dollars, or euros – these are some of the world’s most widely convertible currencies. Anyone who has these currencies can…
Markets have fascinating ways of coming together, especially when we look at how different prices and financial sectors interact. Convergence happens in two main ways – one involves how futures and spot prices come together over time, and another describes how insurance companies and banks increasingly do each other’s jobs. Price Convergence in Derivatives Markets…
Physical assets give their owners benefits beyond just their market price. These hidden perks make up what financial experts call “convenience yield.” Think about having a barrel of oil in your storage tank versus owning a paper contract for oil delivery next month. That barrel in your tank lets you handle surprise shortages or sell…
Imagine a company is like a big ship sailing the ocean. Control stock is a special ticket that ensures passengers boss the captain around more than others. Even if these backseat captains don’t have most tickets, their special ones give them a more significant say in where the ship goes and what it does. What…
A control premium is the extra money a company pays to buy another company. They pay this because they want to be the boss of the other company. How much extra they pay depends on how good the other company’s bosses are at their job. Why Companies Pay a Control Premium Companies pay a control…
Financial markets use contract months to organize when people can buy and sell specific investment products called derivatives. This timing system helps traders know when to enter and exit their market positions. What Makes Contract Months Important Trading derivatives requires picking specific periods, similar to choosing departure dates for airline tickets. Each derivative comes with…
