Investopedia Term Of The Day

Front 1

Trend Analysis

Back 1

An aspect of technical analysis that tries to predict the future movement of a stock based on past data. Trend analysis is based
on the idea that what has happened in the past gives traders an idea of what will happen in the future.

There are three main types of trends: short-, intermediate-
and long-term.

Front 2

Business Model

Back 2

The plan implemented by a company to generate revenue and make a profit from operations. The model includes the components and
functions of the business, as well as the revenues it generates and the expenses it incurs.

Front 3

Limit Order

Back 3

An order placed with a brokerage to buy or sell a set number of shares at a specified price or better. Limit orders also allow an investor to limit the length of time an order can be
outstanding before being canceled.

Front 4

Shareholder Activist

Back 4

A person who attempts to use his or her rights as a shareholder of a publicly-traded corporation to bring about social change. Some of the issues most often addressed by shareholder activists are related to the environment, investments in politically sensitive parts of the world and workers' rights (sweatshops).

The term can also refer to investors who believe that a company's management is doing a bad job and who attempt to gain control of the company and replace management for the good of the shareholders.

Front 5

Perfect Competition

Back 5

A market structure in which the following five criteria are met:

1. All firms sell an identical product.
2. All firms are price-takers.
3. All firms have a relatively small market share.
4. Buyers know the nature of the product being sold and the prices charged by each firm.
5. The industry is characterized by freedom of entry and exit.

Sometimes referred to as "pure competition".

Front 6

Moral Obligation Bond

Back 6

A type of revenue bond issued by a municipality or similar government body. A moral obligation bond not only gives investors the tax exemption benefits inherent in a municipal bond, but also provides an additional moral pledge of commitment against default. The issuing body's commitment is supported by a reserve fund established to meet any debt service costs the government may be unable to make.

Front 7

Empire Building

Back 7

The act of attempting to increase the size and scope of an individual or organization's power and influence. In the corporate world, this is seen when managers or executives are more concerned with expanding their business units, their staffing levels and the dollar value of assets under their control than they are with developing and implementing ways to benefit shareholders.

Front 8

Risk Premium

Back 8

The return in excess of the risk-free rate of return that an investment is expected to yield. An asset's risk premium is a form of compensation for investors who tolerate the extra risk - compared to that of a risk-free asset - in a given investment.