Archive for August, 2008

Stock Symbol

August 24, 2008

A stock symbol, also known as a stock ticker, is a string of letters that identify every publicly traded company. Stock symbols of companies listed and traded on the NYSE have up to three letters in as their symbol, where as Nasdaq listed stocks have up to four letters.
Some example stock tickers:

Google – GOOG
Disney – [...]

Stock Split

August 24, 2008

When investors are given extra shares free for every share they own, it is known as a stock split.
For example, if XYZ company decide to split 3 for 1, then the number of outstanding shares would triple.  Note that a stock split does not affect business fundamentals in the slightest.
It is done by management in [...]

Stock

August 24, 2008

Stock initially was a term for government bonds in the UK. Nowadays, they refer to a security which represents a fractional ownership in a business.  Preferred stock mostly offers a shareholders a regular dividend while   common stock offers shareholders the right to vote on issues as well as claim on assets and future earnings.

Stock Market

August 24, 2008

A term that refers to the market where stocks are traded. It has been a source of fortune for some, and a source of forlone hopes for others.
The stock market has proven to yield a higher return than bonds or other asset classes over the long run. It is a useful venue for investment for [...]

Hostile Takeover

August 24, 2008

A takeover attempt in which the target firm is unwilling to be acquired by the acquirer.
This may lead to serious implications for shareholders. There are a few destructive strategies management may employ in order to ward off an unwanted acquirer.

Friendly Takeover

August 24, 2008

A term that refers to a company’s whose management and board of directors agrees to a merger or acquisition by another company. A publicly traded company would require shareholder approval for the decision to be final.
Buffett usually buys privately owned companies and many owners are quite happy to sell to him. This is similar to [...]

Write-Down

August 24, 2008

Decreasing the value of an asset from its former value on the balance sheet. This may occur for various reasons. A company’s management may feel that an asset is worth materially less than it is on the balance sheet due to it generating less earnings than expected. Also, mark-to-market accounting may cause banks to write-down [...]

White Knight

August 24, 2008

A company that attempts to a friendly takeover of a company currently in danger of being taken over hostilely from another company.
White knights may be handsomely paid off as they are essentially assisting a company in trouble and may profit considerably from a deal as they have additional leverage.

White Elephant

August 24, 2008

A term that refers to a large investment that is unprofitable. This is sometimes used derogatively to describe large, costly projects by a government that holds little economic basis and only has superificial appeal.

Whistle Blower

August 24, 2008

An employee of a corporation that is aware of misdoings inside the company and report these to the authorities or the public.
Many financial regulators have noted that they were only able to find out about the problems at a bank or etc when a whisteblower spilt the beans.