Experience Growing up in a small town in Louisiana with a passion for what made some stocks great and others not so great, Luke Downey performed his first investing exercise as a teenager. With the desire for financial knowledge, he moved to New York City directly after graduation. After a brief stint at a day-trading…
What Is M-Pesa? M-Pesa is a mobile banking service that allows users to store and transfer money through their mobile phones. M-Pesa was introduced in Kenya as an alternative way for the population of the country to have access to financial services. Safaricom, the largest mobile phone operator in Kenya, launched M-Pesa in 2007. The…
Covariance is used in portfolio theory to determine what assets to include in the portfolio. Covariance is a statistical measure of the directional relationship between two asset prices. Modern portfolio theory uses this statistical measurement to reduce the overall risk for a portfolio. A positive covariance means that assets generally move in the same direction….
Dividends vs. Buybacks: An Overview Many companies reward their shareholders in two ways—by paying dividends or buying back shares. An increasing number of blue chips, or well-established companies, are doing both. Paying dividends and stock buybacks make a potent combination that can significantly boost shareholder returns. But which is better—stock buybacks or dividends? A dividend…
Gross profit margin and operating profit margin are two metrics used to measure a company’s profitability. The difference between them is that gross profit margin only figures in the direct costs involved in production, while operating profit margin includes operating expenses like overhead. Both metrics are important in assessing the financial health of a company. Gross Profit Margin Gross profit margin shows the…
What Is an Economic Growth Rate? An economic growth rate is the percentage change in the value of all of the goods and services produced in a nation during a specific period of time, as compared to an earlier period. The economic growth rate is used to measure the comparative health of an economy over…
What Is Weighted Average Life (WAL)? The weighted average life (WAL) is the average length of time that each dollar of unpaid principal on a loan, a mortgageor an amortizing bond remains outstanding. Calculating WAL shows an investor, an analyst, or a portfolio manager how many years it will take to receive roughly half of…
What Is a Debit Memorandum? A debit memorandum, or “debit memo,” is a document that records and notifies a customer of debit adjustments made to their individual bank account. The adjustments made to the account reduce the funds in the account but are made for specific purposes and used only for adjustments outside of any…
Every investor knows the prevailing advice to buy low and sell high. But those who seek substantial returns on their capital may have to wait for months or years to see their money grow exponentially, especially when investing in blue chip stocks such as IBM Corp., Coco-Cola Co., and Microsoft. Therefore, aggressive investors may decide…