When interest rates increase too quickly, it can cause a chain reaction that affects the domestic economy as well as the global economy. It can create a recession in some cases. If this happens, the government can backtrack the increase, but it can take some time for the economy to

What Is Dilution? Dilution occurs when a company issues new shares that result in a decrease in existing stockholders’ ownership percentage of that company. Stock dilution can also occur when holders of stock options, such as company employees, or holders of other optionable securities exercise their options. When the number

What Is Insider Trading? Insider trading involves trading in a public company’s stock by someone who has non-public, material information about that stock for any reason. Insider trading can be either illegal or legal depending on when the insider makes the trade. Insider trading is illegal when the material information

To calculate the gains or losses on a stock investment, one must first know the cost basis, which is the purchase price initially paid for the stock. Investors who neglected to record this information may find it on the order execution confirmation form or the brokerage account statement from the

The term float refers to the regular shares a company has issued to the public that are available for investors to trade. This figure is derived by taking a company’s outstanding shares and subtracting any restricted stock, which is stock that is under some sort of sales restriction. Restricted stock

The distinction between stocks and shares in the financial markets is blurry. Generally, in American English, both words are used interchangeably to refer to financial equities, specifically, securities that denote ownership in a public company. Nowadays, the difference between the two words has more to do with syntax and is

Central Banks In its simplest context, Central Banks are responsible for overseeing the monetary system for a nation (or group of nations); however, central banks have a range of responsibilities, from overseeing monetary policy to implementing specific goals such as currency stability, low inflation and full employment. Central banks also

What Is Liquidity? Liquidity refers to how active a market is. It is determined by how many traders are actively trading and the total volume they’re trading. One reason the foreign exchange market is so liquid is because it is tradable 24 hours a day during weekdays. It is also