Articles Posted in Investment Terms and Concepts

How to invest in an IPO (Initial Public Offering):

An initial public offering (IPO) gives the investing public an opportunity to own and participate in the growth of a formerly private company. By their nature, however, IPOs can be risky and speculative investments.  Consequently, it is important that you fully understand all of the information contained within the prospectus relating to the specific investment you are considering.  In reviewing the prospectus, please pay particular attention to the “risk” factors section as it is there for a reason.

Please keep in mind that this post is being provided for educational purposes only.  It is not designed to be complete in all material respects.  Thus, it should not be relied upon for legal or investment advice.  If you have any questions concerning the contents of this post, please contact a qualified professional.

Treasury Bills, Bonds and Notes:

The purpose of this post is to provide the reader with a description of the investment terms “Treasury Bills, Treasury Bonds and Treasury Notes.” Please keep in mind that this post is being provided for educational purposes only. Consequently, it is not designed to be complete in all material respects. Thus, it is should not be relied upon as legal or investment advice. If the reader has any questions relative to this post, please contact a qualified professional.

Treasury bonds, bills and notes are negotiable debt obligations of the U.S. government, secured by the full faith and credit and issued at various schedules and maturities.

Collateralized Mortgage Obligation (CMO):

The purpose of this post is to provide the reader with a description of the investment phrase “Collateralized Mortgage Obligation.”  Please keep in mind that this post is being provided for educational purposes only. Consequently, it is not designed to be complete in all material respects. Thus, it is should not be relied upon as legal or investment advice. If the reader has any questions relative to this post, please contact a qualified professional.

A Collateralized Mortgage Obligation (CMO) is a mortgage-backed bond that separates mortgage pools into different tranches based on maturity and risk.  This is accomplished by applying income (payments and prepayments of principal and interest) from mortgages in the pool in the order that the CMOs pay out.  Tranches pay different rates of interest and can mature in a few months, or as long as 20 years.

Closed-End Fund:

The purpose of this post is to provide the reader with a description of the investment phrase “Closed-End Fund.” Please keep in mind that this post is being provided for educational purposes only. Consequently, it is not designed to be complete in all material respects. Thus, it is should not be relied upon as legal or investment advice. If the reader has any questions relative to this post, please contact a qualified professional.

A closed-end fund is a type of fund that has a fixed number of shares usually listed on a major stock exchange.  Unlike open-end mutual funds, closed end funds do not stand ready to issue and redeem shares on a continuous basis.  Usually, they tend to have specialized portfolios of stocks, bonds, convertibles or combinations thereof, and may be oriented toward income, capital gains, or a combination of these objectives. 

Variable Annuities:

Variable annuities are considered a security and have become a part of the retirement and investment plans of many Americans.  Before you buy a variable annuity, you should know some of the basics – and be prepared to ask your insurance agent, broker, financial planner, or other financial professional lots of questions about whether a variable annuity is right for you.  It is not unheard of that account executives will make fraudulent or negligent misrepresentation and/or omissions to solicit clients to purchase a variable annuity or to exchange one variable annuity for another because of the large commission associated with such a transaction.

Throughout our blog and website, we have provided information which describes what variable annuities are, the meaning of key words and phrases associated with an annuity contract, how a variable annuity works and the risks associated with such a product.  It is suggested that before you consider purchasing or exchanging a variable annuity, you review these posts. 

Back-End Load:

The purpose of this post is to provide the reader with a description of the investment phrase “back-end load.”  Please keep in mind that this post is being provided for educational purposes only.  Consequently, it is not designed to be complete in all material respects.  Thus, it is should not be relied upon as legal or investment advice.  If the reader has any questions relative to this post, please contact a qualified professional.

A back-end load redemption charge is a charge that an investor pays when withdrawing money from an investment.  Most common in mutual funds and annuities, the back-end load is designed to discourage withdrawals.  Back-end loads typically decline for each year that a shareholder remains in a fund.  For example, if the shareholder sells shares in the first year, a 5% sales charge is levied.  The charge is 4% in the second year, 3% in the third year, 2% in the fourth year,  1% in the fifth year, and no fee is charged if shares are sold after the fifth year.  The same concept generally applies to annuities.  Interestingly, the back-end load varies from company to company and from investment to investment.  Therefore, this is an element of the investment that should be carefully investigated by the investor.

Short Sales, Selling Against the Box and Short Sale Restrictions:

Whether or not you are an investor, you have probably heard of the concept of short selling. The purpose of this post is to provide the reader with general educational information about this type of trading. Please keep in mind that any information contained herein is for educational purposes only and should not be considered as legal or investment advice. You should consult an experienced professional, if you have any questions concerning anything that you read on this page.

A short sale is the sale of a stock that an investor does not own or a sale which is consummated by the delivery of a stock borrowed by, or for the account of, the investor. Short sales are normally settled by the delivery of a security borrowed by or on behalf of the investor. The investor later closes out the position by returning the borrowed security to the stock lender, typically by purchasing securities on the open market.

Annuity – Florida Annuity and Insurance Fraud Litigation Attorney

This post is designed to provide a general definition of the word annuity. It is being provided for general educational purposes only. Thus, it is not designed to be complete in all material respects. If the reader has any questions concerning the contents of this post, he or she should consult a qualified professional.

An annuity is a form of contract sold by life insurance companies that guarantees a fixed or variable payment to the annuitant at some future time, usually retirement. In a fixed annuity, the amount will be paid out in regular or a lump sum payment, with the former varying only with the payout method selected. In a variable annuity, the payout is based on a guaranteed number of units; unit values and payments depend on the value of the underlying investments. Currently, all capital in the annuity grows on a tax-deferred basis.

Active Management – Florida Investment Advisor and Broker – Dealer Investment FINRA Arbitration and Litigation Attorney:

What is “active” investment management?  The purpose of this post is to provide the reader with general educational information relative to this concept.  Please keep in mind that this post is not designed to be complete in all material respects.  Thus, it should not be relied upon as legal or investment advice.  If the reader has any questions concerning this post, you should contact a qualified professional.

Active management refers to an investment style where a portfolio manager actively makes investment decisions and initiates buying and selling of securities in an effort to maximize returns.  It is the opposite of passive management, where the money manager oversees a fixed portfolio structured to match the performance of the overall market or a preselected part of it, a strategy called indexing.