Definition Net Present Value (NPV) is a core financial concept that allows investors and businesses to evaluate the profitability of an investment or project. Essentially, NPV compares the value of a dollar today to the value of that same dollar in the future, accounting for inflation and returns. If you’re looking at an investment, you want to ensure that the cash inflows you expect to receive outweigh the cash outflows.
What Is Net Worth? Net worth is simply the difference between what you own (your assets) and what you owe (your liabilities). It measures the value of everything you own after accounting for your debts. If you have more assets than liabilities, you have a positive net worth. If it’s the other way around, then you have a negative net worth. Understanding your net worth gives you a clear picture of your financial standing and helps you plan for the future.
Definition The Nifty 50, officially known as the Nifty Index, is a stock market index that represents the weighted average of the top 50 large companies listed on the National Stock Exchange (NSE) of India. This index serves as a crucial benchmark for the Indian equity market and is widely tracked by investors and analysts alike. The Nifty 50 is designed to reflect the overall health of the Indian stock market and the economy.
Definition The Nikkei 225 Index is a stock market index that tracks the performance of 225 prominent companies listed on the Tokyo Stock Exchange (TSE). It is one of the most recognized indices in Asia and serves as a barometer for the Japanese economy. Unlike many indices, which are weighted by market capitalization, the Nikkei 225 is price-weighted, meaning that companies with higher stock prices have a greater influence on the index’s performance.
Definition Non-Qualified Deferred Compensation (NQDC) Plans are arrangements that allow employees to defer a portion of their salary or bonuses until a later date, typically retirement. Unlike qualified plans, such as 401(k)s, NQDC Plans do not have to comply with IRS contribution limits or ERISA regulations, providing both employers and employees greater flexibility. Key Components Deferral Amounts: Employees can choose how much they want to defer, which can be a percentage of their salary or a specific dollar amount.
Definition The NYSE Composite Index is a stock market index that represents all common stocks listed on the New York Stock Exchange (NYSE). It serves as a broad indicator of the performance of the NYSE and is calculated using a market capitalization weighted methodology. This means that companies with larger market capitalizations have a greater impact on the index’s performance than smaller companies. Components The NYSE Composite Index includes thousands of stocks, ranging from large multinational corporations to smaller companies.
Definition The OECD or the Organization for Economic Co-operation and Development, is an international organization founded in 1961 to stimulate economic progress and world trade. It brings together 38 member countries committed to democracy and the market economy, working together to promote policies that improve the economic and social well-being of people worldwide. Components of the OECD The OECD consists of various components that contribute to its mission: Committees: Various committees focus on specific areas such as trade, education and health, facilitating discussions among member countries.
Definition An options contract is a financial derivative that provides the buyer the right, but not the obligation, to purchase or sell an underlying asset at a predetermined price within a specified timeframe. It serves as a versatile tool in finance, allowing investors to hedge risks or speculate on market movements. Components of Options Contracts Options contracts comprise several key components: Underlying Asset: This could be stocks, indices, commodities or currencies, which the option is based on.
Definition Options trading is a form of investment that allows individuals to enter contracts granting them the right, but not the obligation, to buy or sell an underlying asset at a specified price, known as the strike price, before or at the expiration date. This trading method provides flexibility and can be used for various purposes, including hedging against risk or speculating on price movements. Components of Options Trading Underlying Asset: This is the financial instrument (like stocks, ETFs or commodities) upon which the option is based.
Definition Pairs trading is a market-neutral trading strategy that involves identifying two securities with a historical correlation. The idea is to buy one security while simultaneously selling the other when their relative prices diverge. The aim is to profit when the prices revert to their historical mean. Components of Pairs Trading Correlation: The foundation of pairs trading lies in the correlation between two securities. A strong correlation means the prices of the securities typically move together.