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The use of borrowed money to increase the potential return on investment.
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The acquisition of another company using a significant amount of borrowed money.
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A business that is designed to provide its owners with a comfortable lifestyle, rather than maximizing profits.
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An investor in a limited partnership who can lose no more than the amount of their investment.
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A type of business structure in which one or more partners act as general partners and are personally liable for the partnership's debts, while other partners act as limited partners and have limited liability.
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The amount of capital that an investor is entitled to receive before any remaining assets are distributed to other shareholders in the event of a company's liquidation.
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Describes how easy it is to convert a financial asset into cash without causing a big loss in value. If you don't have cash on hand to cover expenses, liquidity can help you convert assets into usable income. Cash is the most liquid asset followed by cash equivalents, which are things like money markets, CDs, or time deposits.
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A specified period of time after an IPO during which insiders, such as company executives and early investors, are restricted from selling their shares.
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A corporate finance transaction that enables a company to repurchase some of its shares using debt—reducing the number of shares outstanding increases the remaining owners' respective shares.
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Involves using borrowed money or financial instruments to increase the potential return on investment, potentially amplifying the returns but also increasing risk. This can be done through debt or financial derivatives.
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Describes what an investor has purchased when they buy a security or derivative with the expectation that it will rise in value.
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A type of legal structure for an organization where a corporate loss will not exceed the amount invested in a partnership or limited liability company (LLC). In other words, investors' and owners' private assets are not at risk if the company fails
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In behavioral economics refers to a phenomenon where a real or potential loss is perceived by individuals as psychologically or emotionally more severe than an equivalent gain. For instance, the pain of losing $100 is often far greater than the joy gained in finding the same amount. It leads investors to be more risk-averse and unwilling to take on potentially profitable but risky investments.
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A mutual fund in the hybrid category that automatically resets the asset mix of stocks, bonds, and cash equivalents in its portfolio according to a selected time frame.
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A liquidity premium is an incremental return that compensates an investor for owning an asset that is not highly liquid.
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A corporate structure in the United States whereby the owners are not personally liable for the company’s debts or liabilities.
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A take-profit order placed with a bank or brokerage to buy or sell a set amount of a financial instrument at a specified price or better.