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how are the black scholes model the kelly criterion and the kalman filter related | the black scholes model kelly criterion and the kalman filter are all mathematical systems that can be used to estimate investment returns when some key variables depend on unknown probabilities the black scholes model is used to calculate the theoretical value of options contracts based upon their time to maturity and other factors the kelly criterion is used to determine the optimal size of an investment based on the probability and expected size of a win or loss the kalman filter is used to estimate the value of unknown variables in a dynamic state where statistical noise and uncertainties make precise measurements impossible | |
what is a good kelly ratio | while some believers in the kelly criterion will use the formula as described there are also drawbacks to placing a very large portion of one s portfolio in a single asset in the interest of diversification an investor should think twice about investing more than 20 of their bankroll in a single investment even if the kelly criterion suggests a higher percentage | |
what is a keltner channel | keltner channels are volatility based bands that are placed on either side of an asset s price and can aid in determining the direction of a trend the keltner channel uses the average true range atr or volatility with breaks above or below the top and bottom barriers signaling a continuation image by sabrina jiang investopedia 2021understanding the keltner channelthe keltner channel was first introduced by chester keltner in the 1960s the original formula used simple moving averages sma and the high low price range to calculate the bands in the 1980s a new formula was introduced that used average true range atr the atr method is commonly used today 1the keltner channel is a volatility based technical indicator composed of three separate lines the middle line is an exponential moving average ema of the price additional lines are placed above and below the ema the upper band is typically set two times the atr above the ema and the lower band is typically set at the inverse of two times the atr below the ema the bands expand and contract as volatility measured by atr expands and contracts since most price action will be encompassed within the upper and lower bands the channel moves outside the channel can signal trend changes or an acceleration of the trend the direction of the channel such as up down or sideways can also aid in identifying the trend direction of the asset using keltner channelskeltner channels have multiple uses how they are used largely depends on the settings a trader uses a longer ema will mean more lag in the indicator so the channels won t respond as quickly to price changes a shorter ema will mean the bands react quickly to price changes but will make it harder to identify the true trend direction a bigger multiplier of the atr to create the bands will mean a larger channel the price will hit the bands less often a smaller multiplier means the bands will be closer together and the price will reach or exceed the bands more often traders can set up their keltner channels any way they like with the following potential uses in mind keltner channel calculation | |
who was kenneth arrow | kenneth arrow 1921 2017 was an american neoclassical economist who won the nobel memorial prize in economics along with john hicks in 1972 for his contributions to general equilibrium analysis and welfare economics 1arrow s research has also explored the social choice theory endogenous growth theory collective decision making the economics of information and the economics of racial discrimination among other topics 2understanding kenneth arrowborn in new york city in 1921 kenneth arrow taught at stanford university harvard and the university of chicago he earned his ph d from columbia university with a dissertation that discussed his theorem called the general impossibility theorem 3 arrow determined in this theorem that results could not be decided fairly during an election that s because he stated ideal voting methods did not exist when there are more than two candidates trying to satisfy certain criteria arrow outlined the criteria as follows the application of arrow s general impossibility theorem has gone beyond democracy and election results it has been used for both welfare economics and social justice and linked to the liberal paradox which was developed by economist amartya sen according to sen and his paradox there is generally a conflict between the distribution of goods and services in a society and individual freedom as both cannot exist at the same time 5arrow later published a book on the same subject 6 arrow is also known as one of the first economists to recognize the so called learning curve 7legacy of kenneth arrowarrow s theoretical insight has proven its importance over the decades but he contended that his conclusions about the workings of competitive markets held true only under ideal that is to say unrealistic assumptions these assumptions ruled out the existence of third party effects an example of such an effect would be the idea that the sale of a product by harry to joe would not affect the well being of sally however this idea is routinely violated in the real world by the sale of products that harm the environment among other effects 8arrow s later research translated simple ideas into elegant mathematics which other economists extended into unanticipated directions one of those notions was learning by doing an idea that arrow examined in the early 1960s the basic idea was that the more a company produced the smarter it got 9 decades later economists incorporated this idea into sophisticated theories of endogenous growth which state that economic growth depends on internal company policies that promote innovation and education 10kenneth arrow died on feb 21 2017 11 | |
kenneth i chenault is a business executive who works in the financial services industry chenault is best known for the time he spent as chair and chief executive officer ceo of american express axp | chenault started working with the company in 1981 where he moved up the ranks to lead the company becoming one of the first african americans to lead a major company mr chenault left the company after 37 years and joined venture capital firm general catalyst in 2018 1 he also sits on the board of a number of other companies including airbnb and berkshire hathaway 23investopedia alex dos diazearly life and educationkenneth i chenault was born in new york in 1951 and earned his undergraduate degree from bowdoin college and his jd from harvard law school 6he began his career as an associate with rogers wells then worked as a management consultant for bain company before joining american express as director of strategic planning in september 1981 7notable accomplishmentschenault worked with american express in a number of different areas since he joined the company in 1981 he became president of the consumer card group in 1989 then assumed the role of president of travel related services in 1993 7two years later he was named vice president chair of the company chenault served as the company s president and chief operating officer coo in 1997 before taking over as chair and ceo in 2001 he became one of the first african americans to head a fortune 500 company in the fall of 2017 chenault announced that he would be leaving american express in february 2018 8in 2008 with the global credit crisis american express was facing headwinds as the world was contracting the federal reserve system approved the company s application to become a bank holding company this allowed american express to receive emergency financing from the tarp program 9at the time of his departure as american express ceo chenault was only one of three african americans to serve as a ceo of a fortune 500 company 5 he is also the first african american to serve on the board at meta formerly facebook 10chenault often addresses the need for diversity in the corporate world citing upper management s lack of seeking out diverse candidates rather than there being a lack of talent in 2020 chenault co founded oneten a group of top executives looking to hire one million black americans by 2030 into living wage jobs 11upon his departure from american express mr chenault accepted the position of chair and managing partner of general catalyst a venture capital firm that makes growth and early stage investments in companies like warby parker stripe airbnb and snapchat chenault s decision to enter the silicon valley market was due to changes and maturation in the digital space 12chenault joined the boards of several companies including airbnb abnb and berkshire hathaway brk a brk b he also served as a board member at ibm and is a board member of the council on foreign relations 13 he lives in new rochelle new york with his wife and children | |
what is kenneth chenault best known for | kenneth i chenault is best known for being chief executive officer and chairman of american express from 2001 to 2018 4 he was only the third black american ceo of a fortune 500 company 5who is the ceo of american express after kenneth i chenault retired as ceo of american express in 2018 stephen squeri a former vice chairman of the company took over as ceo 4 | |
what happened to kenneth chenault | upon his retirement as ceo of american express kenneth chenault accepted a position as chair and managing partner of venture capital firm general catalyst 1 he also became a board member for several major companies the bottom linekenneth chenault is a business leader and former ceo of american express who at the time of his departure from the company in 2018 was one of only three fortune 500 ceos who were african american 5during his time at the helm of american express kenneth chenault helped increase the company s market share by expanding its customer base chenault achieved this by offering credit cards in addition to charge cards and adding membership rewards programs chenault is also a member of the boards of several notable companies and is the managing partner for a venture capital firm | |
what is the kenney rule | kenney rule refers to a ratio that sets a target of unearned premiums to an insurer s policyholders surplus of 2 to 1 developed by roger kenney it helps determine and reduce the risk of an insurance company s insolvency the rule is commonly used by companies that write property and casualty insurance regulators can use the kenney rule to an insurer s ability to pay out claims and remain solvent understanding the kenney rulethe kenney rule is named after roger kenney an expert in insurance finances who published the book fundamentals of fire and casualty insurance strength in 1949 while kenney s focus was on underwriting property insurance policies the rule has been adapted to insurers who underwrite other types of policies including liability insurance this rule also called the kenney ratio is a guiding principle used by insurance companies the ratio varies according to the insurance lines and is still commonly used in the property and casualty segment of the industry the common ratio is traditionally considered to be 2 to 1 of net premiums to surplus specific segments such as liability insurance use a slightly different ratio 3 to 1 but what does this all mean the kenney rule states that the ratio of policyholders surplus to its unearned premium reserve is an indicator of the strength of one insurance company relative to another the policyholders surplus represents the insurer s net assets comprised of capital reserves and surplus the unearned premium represents the liability that is still unaccounted for by the insurer having a higher policyholders surplus relative to unearned premium means that the insurer is more robust financially a lower policyholders surplus to unearned premiums implies the opposite that the company is financially unstable having a ratio that s too high may indicate that an insurance company isn t generating enough business special considerationsthere is no one size fits all standard for a kenney rule ratio that is considered good or acceptable the type of policy determines what is regarded as a healthy kenney rule ratio policies that do not provide extended coverage or those that don t have an adjusted coverage date are easier to account for because incidents occurring before or after the policies effective period are no longer covered insurance companies want to make sure they have enough of a cushion to cover any liabilities associated with the policies they underwrite but that doesn t mean a high kenney ratio is always a good idea that s because a very high surplus to liability ratio represents an opportunity cost the benefits that the company may miss out on by having too much cash on hand in its reserves here s why if the insurer is in a relatively low risk environment and does not underwrite many policies it can have a high ratio and be forgoing future additions to its surplus this is because it is not taking on new business ideally an insurer should strive to achieve a ratio that strikes the perfect balance between the two generating business and maintaining operational growth while still accumulating a sufficient cushion to protect them against potential claims again the exact ratio varies depending on the type of policy involved | |
what is a keogh plan | keogh plan is a term used to describe qualified plans that cover the self employed this includes defined benefit plans and defined contribution plans though most plans are set as the latter contributions are generally tax deductible up to a certain percentage of annual income with applicable absolute limits in u s dollar terms which the internal revenue service irs can change from year to year 1understanding the keogh plankeogh plans are the same qualified plans other small businesses can use the defined contribution plan which include profit sharing plans and money purchase plans and the defined benefit plan however the irs calls them keogh plans if they cover a self employed individual 2keogh plans can invest in the same set of securities as 401 k s and iras including stocks bonds certificates of deposit cds and annuities the term comes from u s representative eugene keogh who was instrumental in passing the self employed individuals tax retirement act of 1962 because the act was passed to ensure the self employed had access to retirement plans any plans designed for them became known as keogh plans however the distinction between corporate and other retirement plan sponsors was removed when the economic growth and tax relief reconciliation act of 2001 was passed 3as with other qualified retirement accounts funds in a keogh plan can be accessed as early as age 59 and withdrawals must begin by age 73 4types of keogh planskeogh plans can be set up as qualified defined contribution plans in which the contributions are made on a regular basis up to a limit profit sharing plans are one of the two types of keogh plans that allow a business to contribute up to 66 000 as of 2023 1 a business does not have to generate profits to set aside money for this type of plan money purchase plans are less flexible compared to profit sharing plans and require a business to contribute a fixed percentage of its income every year that is specified in plan documents if a company alters its fixed percentage it may face penalties the contribution limit for 2023 for money purchase plans is set at 25 of annual compensation or 66 000 whichever is lower 1qualified defined benefit plans state the annual benefits to be received at retirement and these benefits are typically based on salary and years of employment contributions towards defined benefit keogh plans are based on stated benefits and other factors such as age and expected returns on plan assets for 2023 the maximum annual benefit is 265 000 or 100 of the employee s compensation whichever is lower 1advantages and disadvantages of keogh planskeogh plans have more administrative burdens and higher upkeep costs than simplified employee pension sep or 401 k plans the key advantage to keogh plans is that they have higher contribution limits making them a popular option for many high income business owners | |
what is the difference between a keogh and ira | keogh plans are designed for the self employed while the self employed can contribute to an ira keogh plans have much higher contribution limits who is eligible for a keogh plan keogh plans are for the self employed so you can enroll in one if you re a sole proprietor or work for yourself | |
is a keogh the same as a solo 401 k | a solo 401 k also called a one participant 401 k is a regular 401 k with a special calculation for a sole proprietor or small business with no employees a keogh plan has much higher contribution limits than a solo 401 k the bottom linea keogh plan is a retirement plan for the self employed or unincorporated small businesses they are generally defined contribution plans or defined benefit plans keogh plans can invest in the same instruments as other types of retirement plans such as stocks bonds certificates of deposit cds and annuities | |
what is a key currency | a key currency refers to a currency which is stable does not fluctuate much and provides the foundation for exchange rates for international transactions because of their global use key currencies tend to set the value of other currencies also these currencies tend to have a stable valuation over time a key currency usually comes from a country that is financially strong economically stable and developed and one that is involved in the global market nevertheless key currency rates do fluctuate daily and updated key currency rates can appear in financial institutions and financial reporting outlets understanding key currencieskey currencies form the reference value for international commerce transactions and as an exchange rate in the foreign exchange forex marketplace an exchange rate is the price of a nation s currency relative to another country s currency and it includes the domestic currency and the foreign currency international commerce is trade between companies in different countries or trade between different countries national central banks hold quantities of key currencies as reserve currencies reserve currency helps these nations support investments complete international business transactions and pay international debt obligations these banks may also hold key currency to influence their domestic exchange rate a large percentage of commodities such as gold and oil are priced in the key and reserve currency causing other countries to hold this currency to pay for these goods however a currency used as a reserve currency may not be considered a key currency as a monetary practice countries with weaker economies will align their exchange rates with a dominant trading partner the central bank of some developing nations may fix their exchange rate to a key currency known as currency pegging this practice has the effect of limiting monetary policy flexibility but can increase confidence in a country s economy by fixing their own currency exchange rates to key currency rates central banks in some developing nations hope to make their own economy more stable and make international transactions easier examples of key currencieswhile the term key currency is not precisely defined by any quantitative threshold for use or reference as a benchmark some key currency examples can be identified based on their characteristics these include | |
what is a key employee | a key employee is an employee with major ownership and or decision making role in the business key employees are usually highly compensated either monetarily or with benefits or both key employees may also receive special benefits as an incentive both to join the company and to stay with the company understanding key employeethe term key employee is also used by the internal revenue service the irs uses this term with regard to company sponsored defined contribution retirement plans it refers | |
how a key employee affects a business | from an internal perspective apart from the irs classification a key employee may be considered to be an intrinsic part of a company s operations such an employee could be influential in securing capital for the business which may occur through their connections or by virtue of their work for example the employee may hold a role tied directly to sales channels for the company intertwining their performance and business activities with the cash flow the employee might be the top performing salesperson at the company driving a significant portion of the regular revenue the employee for a variety of reasons may represent a public face associated with the company s brand and is thus seen as crucial to maintaining the investment and support of shareholders and customers there are other irs and government rules that have different definitions of key employee for different purposes the company may define the work of the employee as vital to the infrastructure and operation of the business even though that employee may not have a highly visible role in terms of the public or outside business relations for instance the chief scientist on a team developing a novel new product expected to be a mainstay behind the business s revenue and income could be regarded as a key employee special considerationsemployers may feel the need to address compensation for key employees differently from the majority of the staff beyond providing salary this can include offering a variety of options for them to save for retirement or presenting them work life balance benefits to keep them engaged in the business conversely employers might adopt a different stance if a key employee makes use of the family and medical leave act to take unpaid leave from work such employees who may rank among the top 10 percent of salaried workers at a company might not be reinstated by the employer under certain circumstances | |
what is key money | key money is a fee paid to a manager a landlord or even a current tenant to secure a lease on a residential rental property the term is sometimes used to refer to a security deposit however in some competitive rental markets key money is simply a gratuity or a bribe charging key money may be legal in some cases for commercial real estate agreements as long as it is written into the lease for the property understanding key moneythe term key money has different meanings in various parts of the world and in the u s in some places key money is synonymous with a security deposit it is a payment of the equivalent of one or two months rent payable when the lease is signed laws vary from state to state but generally this money is required to be held in escrow and is to be returned to the leaseholder with interest after the lease expires the landlord may withhold payment of some or all of the security deposit only if the tenant damages the property or fails to pay the rent in some cities key money is paid by a prospective tenant to a property owner or manager a building superintendent or even the current tenant in the hopes of securing a rental contract in such cases the key money is a bribe to ensure that the prospective tenant s application is selected over others this practice is limited to cities with low vacancy rates and high prices particularly if some rentals are subject to price controls that make them all the more desirable a requirement for key money may be legal if it is written into the lease demands for key money in exchange for apartment leases were once common although illegal in new york city the city s complex rent stabilization regulations resulted in a two tiered system of extremely expensive market rate units and rarely available rent stabilized units the city s rent stabilization laws still exist but the practice of paying key money apparently is no longer common according to the real estate website brickunderground com payment of key money for commercial real estate is still common in new york city and in this case it s perfectly above board the holder of an attractively priced long term commercial lease may sign over the lease to a new tenant in return for a payment of key money it is particularly common when the previous tenant is signing over a business that has already been equipped for use as a restaurant for example the legal site legaleagle notes that requiring key money may be legal if it is specifically written into the lease for the property giving key money to a landlord as a gift is common practice in some countries notably japan and mexico | |
what are key performance indicators kpis | key performance indicators kpis are quantifiable measurements used to gauge a company s overall long term performance kpis specifically help determine a company s strategic financial and operational achievements especially compared to those of other businesses within the same sector jiaqi zhou investopediaunderstanding key performance indicators kpis also referred to as key success indicators ksis kpis vary between companies and between industries depending on performance criteria for example a software company striving to attain the fastest growth in its industry may consider year over year yoy revenue growth as its chief performance indicator conversely a retail chain might place more value on same store sales as the best kpi metric for gauging growth at the heart of kpis lie data collection storage cleaning and synthesizing the information may be financial or nonfinancial and may relate to any department across the company the goal of kpis is to communicate results succinctly to allow management to make more informed strategic decisions key performance indicators kpis gauge a company s output against a set of targets objectives or industry peers categories of kpismost kpis fall into four different categories with each category having its own characteristics time frame and users types of kpiskey performance indicators tied to the financials typically focus on revenue and profit margins net profit the most tried and true of profit based measurements represents the amount of revenue that remains as profit for a given period after accounting for all of the company s expenses taxes and interest payments for the same period financial metrics may be drawn from a company s financial statements however internal management may find it more useful to analyze different numbers that are more specific to analyzing the problems or aspects of the company that management wants to analyze for example a company may leverage variable costing to recalculate certain account balances for internal analysis only examples of financial kpis include customer focused kpis generally center on per customer efficiency customer satisfaction and customer retention these metrics are used by customer service teams to better understand the service that customers have been receiving examples of customer centric metrics include kpis are usually not externally required they are simply internal measurements used by management to evaluate a company s performance process metrics aim to measure and monitor operational performance across the organization these kpis analyze how tasks are performed and whether there are process quality or performance issues these types of metrics are most useful for companies with repetitive processes such as manufacturing firms or companies in cyclical industries examples of process performance metrics include marketing kpis attempt to gain a better understanding of how effective marketing and promotional campaigns have been these metrics often measure conversation rates on how often prospective customers perform certain actions in response to a given marketing medium examples of marketing kpis include a company may desire operational excellence in this case it may want to track how its internal technology it department is operating these kpis may encourage a better understanding of employee satisfaction or whether the it department is being adequately staffed examples of it kpis include the ultimate goal of a company is to generate revenue through sales though revenue is often measured through financial kpis sales kpis take a more granular approach by leveraging nonfinancial data to better understand the sales process examples of sales kpis include management may tie bonuses to kpis for salespeople their commission rate may depend on whether they meet expected conversion rates or engage in an appropriate number of leads companies may also find it beneficial to analyze kpis specific to their employees ranging from turnover to retention to satisfaction a company may have a wealth of information already available about its staff examples of human resource or staffing kpis include examples of kpislet s take a look at electric vehicle maker tesla tsla for a few examples of kpis in real life these numbers are from its fourth quarter q4 2021 earnings release during the quarter tesla produced a record 305 840 vehicles and delivered 308 650 vehicles 1 production is a big deal for the company because it has consistently been criticized for being bad at ramping up increased manufacturing scale means more market share and profits for tesla for the quarter tesla s automotive gross margin expanded to 30 6 2 gross margin is one of the best measures of profitability for tesla because it isolates its vehicle production costs tesla managed to expand its gross margin in q4 even as sales of lower priced models outpaced its higher margin models 1tesla s free cash flow clocked in at 2 8 billion during the quarter that represented a vast improvement from the 1 9 billion free cash flow in the prior year 2 tesla s level of free cash flow production suggested that the company was reaching a scale of profitability without the help of regulatory credits 3kpi levelscompanies can use kpis across three broad levels first company wide kpis focus on the overall business health and performance these types of kpis are useful for informing management of how things are going however they are often not granular enough to make decisions company wide kpis often kick off conversations on why certain departments are performing well or poorly at this point companies often begin digging into department level kpis these are more specific than company wide kpis department level kpis are often more informative as to why specific outcomes are occurring many of the examples mentioned above are department level kpis as they focus on a very niche aspect of a company if a company chooses to dig even deeper it may engage with project level or subdepartment level kpis these kpis are often specifically requested by management as they may require very specific data sets that may not be readily available for example management may want to ask very specific questions to a control group about a potential product rollout | |
how to create a kpi report | with companies seemingly collecting more data every day it can become overwhelming to sort through the information and determine what kpis are most useful and impactful for decision making when beginning the process of pulling together kpi dashboards or reports consider the following steps advantages of kpisa company may wish to analyze kpis for several reasons kpis help inform management of specific problems the data driven approach provides quantifiable information useful in strategic planning and ensuring operational excellence kpis help hold employees accountable instead of relying on feelings or emotions kpis are statistically supported and cannot discriminate across employees when used appropriately kpis may help encourage employees as they realize their numbers are being closely monitored kpis are also the bridge that connects actual business operations and goals a company may set targets but without the ability to track progress toward those goals there is little to no purpose in those plans instead kpis allow companies to set objectives and then monitor progress toward those objectives limitations of kpisthere are some downsides to consider when working with kpis there may be a long time frame required for kpis to provide meaningful data for example a company may need to collect annual data from employees for years to better understand trends in satisfaction rates over long periods of time kpis require constant monitoring and close follow up to be useful a kpi report that is prepared but never analyzed serves no purpose in addition kpis that are not continuously monitored for accuracy and reasonableness do not encourage beneficial decision making kpis open up the possibility for managers to game kpis instead of focusing on actually improving processes or results managers may feel incentivized to focus on improving kpis tied to performance bonuses in addition quality may decrease if managers are hyper focused on productivity kpis and employees may feel pushed too hard to meet specific kpi measurements that may simply not be reasonable informs management of how a company is performing in countless wayshelps hold employees accountable for their actions or lack of can motivate employees who feel positively challenged to meet targetsallows a company to set goals and measure progress toward those objectivesresults in potential time commitment to consistently gather data over long periods of timerequires ongoing monitoring for accuracy and reasonableness in datamay encourage managers to focus on kpis instead of broader strategiesmay discourage employees if kpi targets are unreasonable | |
what does kpi mean | kpi is an abbreviation for key performance indicator data that has been collected analyzed and summarized to help decision making kpis may be a single calculation or value that summarizes a period of activity such as 450 sales in october by themselves kpis do not add any value to a company however a company can use this information to make more informed decisions about business operations and strategies | |
what is an example of a kpi | one of the most basic examples of a kpi is revenue per client rpc for example if you generate 100 000 in revenue annually and have 100 clients then your rpc is 1 000 a company can use this kpi to track its rpc over time | |
what are 5 of the most common kpis | kpis vary from business to business and some kpis are more suitable for certain companies compared to others in general five of the most commonly used kpis are | |
how do you measure kpis | it depends on the actual kpi being measured generally speaking businesses measure and track kpis through business analytics software and reporting tools this includes everything from the collection of data via reliable sources the safe storage of information the cleaning of data to standardize its format for analysis and the actual number crunching finally kpis are often reported using visualization or reporting software | |
what makes a kpi good | a good kpi provides objective and clear information on progress toward an end goal it tracks and measures factors such as efficiency quality timeliness and performance while providing a way to measure performance over time the ultimate goal of a kpi is to help management make more informed decisions the bottom linekpis offer an effective way to measure and track a company s performance on a variety of different metrics by understanding exactly what kpis are and how to implement them properly managers are better able to optimize the business for long term success | |
what is key person insurance | key person insurance is a life insurance policy that a company purchases on the life of an owner a top executive or another individual considered critical to the business the company is the beneficiary of the policy and pays the premiums this type of life insurance is also known as key man or keyman insurance key woman insurance and business life insurance understanding key person insurancekey person insurance offers a financial cushion if the sudden loss of a certain individual would profoundly negatively affect the company s operations the death benefit essentially buys the company time to find a new person or to implement other strategies to save or shut down the business in a small business the key person is usually the owner the founders or perhaps a key employee or two the main qualifying point is whether the person s absence would cause major financial harm to the company if this is the case key person insurance is definitely worth considering in addition to life insurance key person insurance is also available as disability coverage in case the individual is incapacitated and no longer able to work the process of key person insurancefor key person insurance a company purchases a life insurance policy on certain employee s pays the premiums and is the beneficiary of the policy in the event of the person s death the company receives the policy s death benefit that money can be used to cover the costs of recruiting hiring and training a replacement for the deceased person if the company doesn t believe it can continue operations it can use the money to pay off debts distribute money to investors provide severance benefits to employees and close the business down in an orderly manner key person insurance gives the company some options other than immediate bankruptcy to determine whether a business needs this kind of coverage company leaders must consider who is irreplaceable in the short term in many small businesses it s the owner who does most things such as keeping the books managing employees handling key customers etc without this person the business can come to a stop categories of loss covered by key person insurancekey person insurance can cover a company against a range of risks for example it may provide cost of key person insurance | |
how much insurance a company needs will depend on the size and nature of the business and the key person s role it s worth asking for quotes on 100 000 250 000 500 000 750 000 and 1 million policies and comparing the costs of each | the cost will also depend on whether the company buys a term life policy or a permanent life policy term life is almost always significantly cheaper in addition the cost of the coverage will vary on a variety of factors such as the health of the key person their gender their age the type of policy the amount of coverage the type of company its structure and the industry it is part of | |
what are the benefits of key person insurance | key person insurance financially protects a company against the death or incapacitation of its key person the money from the insurance helps a company replace the key person and the costs associated with doing so it can also be used to pay off debts pay back investors or cover any other financial costs the company may incur when losing its key person | |
how much key person insurance do you need | the amount of key person insurance needed for a business will vary depending on the business and the type of role the key person plays purchasing key person insurance that is eight to 10 times the key person s salary is often recommended or the monetary value of the key person the latter option can be difficult to value but methods include the amount of revenues profits associated with the key person or the costs required to replace the key person which includes recruitment training and the loss of revenue in the time it takes to replace the individual who pays for key person insurance the company that purchases the key person insurance is the entity that pays the premiums for the insurance the key person does not pay the insurance the bottom linekey person insurance allows a company to continue to operate in the event of the loss of an individual critical to the success of the business the death benefit to the company can cover a variety of costs to ensure the business can survive the sudden loss of its key person choosing the right key person insurance the amount of the policy and other details is particularly important for small businesses and new startups | |
what is the key rate | the key rate is the specific interest rate that determines bank lending rates and the cost of credit for borrowers the two key interest rates in the u s are the discount rate and the federal funds rate these are rates that are set either directly or indirectly by the federal reserve in order to influence lending and the supply of money and credit in the economy understanding the key ratethe key rate is the interest rate at which banks can borrow when they fall short of their required reserves they may borrow from other banks or directly from the federal reserve for a very short period of time the rate that banks can borrow from other banks at is called the federal funds rate the rate banks borrow from the federal reserve at is called the discount rate | |
when storing large amounts of money in any bank it is important to remember that their available reserves at any given time may influence the amount of cash that you can withdraw at once | special considerationskey rates are one of the chief tools used by the federal reserve system to implement monetary policy when the federal reserve wants to expand the money supply in the economy it will typically buy bonds on the open market with newly created money using the federal funds rater to gauge the volume and speed of bond purchased needed when the federal reserve is in a contractionary phase it will raise the rates to increase the cost of borrowing the federal reserve is able to control the money supply by adjusting the key rate since the prime rate depends on the key rate the prime rate is the benchmark rate offered by banks to consumers as a general rule of thumb the national prime rate is usually about 3 percentage points above the fed funds rate 12 if the fed funds rate increases after the discount rate increases banks will alter their prime rates to reflect this change therefore the rates on consumer loans such as the mortgage rates and credit card rates will also increase | |
when key rates increase the cost of consumer borrowing increases causing consumers to save more and spend less therefore causing the economy to contract lowering key rates will lower the cost of borrowing and cause a decrease in saving and an increase in spending expanding the economy | types of key ratesthe fed funds rate is the rate that banks charge each other on loans used to meet their reserve requirements this rate governs the overnight lending of funds made available to private sector banks credit unions and other loan institutions if a bank decides to borrow directly from the federal reserve it is charged the discount rate the federal reserve sets the discount rate if the discount rate is increased banks are reluctant to borrow given that the cost of borrowing has been set higher in this situation banks will build up reserves and lend less money to individuals and businesses on the other hand if the fed reduces the discount rate the cost of borrowing will be cheaper for banks leading them to lend more money out and to borrow more funds to meet their reserve requirements | |
what is key rate duration | key rate duration measures how the value of a debt security or a debt instrument portfolio generally bonds changes at a specific maturity point along the entirety of the yield curve when keeping other maturities constant the key rate duration is used to measure the sensitivity in a debt security s price to a 1 change in yield for a specific maturity the formula for key rate durationinvestopedia | |
where | calculating key rate durationas an example assume that a bond is originally priced at 1 000 and with a 1 increase in yield would be priced at 970 and with a 1 decrease in yield would be priced at 1 040 based on the formula above the key rate duration for this bond would be krd 1 0 4 0 9 7 0 2 1 1 0 0 0 7 0 2 0 3 5 where krd key rate duration begin aligned text krd left 1 040 970 right left 2 times1 times 1 000 right 70 20 3 5 textbf where text krd key rate duration end aligned krd 1 040 970 2 1 1 000 70 20 3 5where krd key rate duration | |
what does key rate duration tell you | key rate duration is an important concept in estimating the expected changes in value for a bond or portfolio of bonds because it does so when the yield curve shifts in a manner that is not perfectly parallel which occurs often effective duration another important bond metric is an insightful duration measure that also calculates expected changes in price for a bond or portfolio of bonds given a 1 change in yield but it is only valid for parallel shifts in the yield curve this is why the key rate duration is such a valuable metric key rate duration and effective duration are related there are 11 maturities along the treasury spot rate curve and a key rate duration may be calculated for each the sum of all the 11 key rate durations along the portfolio s yield curve equal the effective duration of the portfolio example of how to use the key rate durationit can be difficult to interpret an individual key rate duration because it is very unlikely that a single point on the treasury yield curve will have an upwards or downwards shift at a single point while all others remain constant it s useful for looking at key rate durations across the curve and looking at the relative values of key rate durations between two securities for example assume bond x has a one year key rate duration of 0 5 and a five year key rate duration of 0 9 bond y has a key rate durations of 1 2 and 0 3 for these maturity points respectively it could be said that bond x is half as sensitive as bond y on the short term end of the curve while bond y is one third as sensitive to interest rate changes on the intermediate part of the curve | |
what is a key ratio | key ratio is the name given to any financial ratio that s considered particularly effective at measuring illustrating and summarizing a company s financials in relation to its competitors or peers investors and companies rely on key ratios all the time to get a snapshot of liquidity efficiency profitability and so forth each key ratio focuses on a particular aspect of the company meaning it is often necessary to consult several of them to get a more complete idea of how the subject is faring those that are in sound financial health will have superior ratios to those that are performing poorly | |
how a key ratio works | key ratios take data from a company s financial statements such as its balance sheet income statement and statement of cash flows and then compare them with other items these numbers are then calculated together to produce a ratio that represents key aspects of the company s financial picture such as liquidity profitability use of debt and earnings strength there are plenty of financial ratios at one s disposal and determining which are key varies according to opinion and popularity some of the most prevalent ratios include not all companies operate in the same way so commonly used ratios tend to vary by industry in other words the ratios applied to best compare technology companies won t be the same as those used to effectively compare banks in the case of the latter it s typical to utilize the capital to assets ratio the loan loss reserves to total loans ratio and the liquidity ratio for tech stocks on the other hand analysts and investors usually prefer to examine price to sales p s ratios return on research capital rorc and so forth example of a key ratiosam is an analyst with xyz research and wants to learn more about abc corp he goes to abc corp s investor relations website and downloads its most recent financial statements sam wants to find out how efficient abc corp is at managing its expenses to generate profits looking at net income sales operating costs accounts payable and net assets figures sam computes some of abc corp s key profitability ratios such as roa and profit margin advantages and disadvantages of a key ratiokey ratios represent a crucial step in determining the financial health of a company as well as whether it is being fairly priced by investors when utilized correctly they can help us to pinpoint each company s strengths and weaknesses and discover how it stacks up against its peers comparisons should be made with companies that are in the same industry and ideally have similar business models | |
what is keynesian economics | keynesian economics is a macroeconomic theory of total spending in the economy and its effects on output employment and inflation it was developed by british economist john maynard keynes during the 1930s in an attempt to deal with the effects of the great depression the central belief of keynesian economics is that government intervention can stabilize the economy keynes theory was the first to sharply separate the study of economic behavior and individual incentives from the study of broad aggregate variables and constructs based on his theory keynes advocated for increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the depression subsequently keynesian economics was used to refer to the concept that optimal economic performance could be achieved and economic slumps could be prevented by influencing aggregate demand through economic intervention by the government keynesian economists believe that such intervention can result in full employment and price stability jessica olah investopediaunderstanding keynesian economicskeynesian economics represented a new way of looking at spending output and inflation previously classical economic thinking held that cyclical swings in employment and economic output create profit opportunities that individuals and entrepreneurs would have an incentive to pursue in so doing they would correct imbalances in the economy according to keynes view of this so called classical theory if aggregate demand in the economy fell the resulting weakness in production and jobs would precipitate a decline in prices and wages a lower level of inflation and wages would induce employers to make capital investments and employ more people stimulating employment and restoring economic growth 1however keynes believed that the depth and persistence of the great depression severely tested this hypothesis 1in his book the general theory of employment interest and money and other works keynes argued against this construct of classical theory asserting that during recessions business pessimism and certain characteristics of market economies would exacerbate economic weakness and cause aggregate demand to plunge further than it already had 1for example keynesian economics disputes the notion held by some economists that lower wages can restore full employment because labor demand curves slope downward like any other normal demand curve 1similarly poor business conditions may cause companies to reduce capital investment rather than take advantage of lower prices to invest in new plants and equipment this also would have the effect of reducing overall expenditures and employment 2keynesian economics and the great depressionkeynesian economics is sometimes referred to as depression economics as keynes general theory was written during a time of deep depression not only in his native united kingdom but worldwide the famous 1936 book was informed by keynes understanding of events arising during the great depression which keynes believed could not be explained by classical economic theory as he portrayed it in his book other economists had argued that in the wake of any widespread downturn in the economy businesses and investors taking advantage of lower input prices in pursuit of their own self interest would return output and prices to a state of equilibrium unless otherwise prevented from doing so keynes believed that the great depression seemed to counter this theory output was low and unemployment remained high during this time the great depression inspired keynes to think differently about the nature of the economy from these theories he established real world applications that could have implications for a society in economic crisis keynes rejected the idea that the economy would return to a natural state of equilibrium instead he argued that once an economic downturn sets in for whatever reason the fear and gloom that it engenders among businesses and investors will tend to become self fulfilling and can lead to a sustained period of depressed economic activity and unemployment in response to this keynes advocated a countercyclical fiscal policy by which during periods of economic woe the government should undertake deficit spending to make up for the decline in investment and boost consumer spending to stabilize aggregate demand 2keynes was highly critical of the british government at the time 3 the government greatly increased welfare spending and raised taxes to balance the national books keynes said that this would not encourage people to spend their money thereby leaving the economy unstimulated and unable to recover and return to a successful state keynes also criticized the idea of excessive saving unless it was for a specific purpose such as retirement or education he saw it as dangerous for the economy because more money sitting stagnant meant less money in the economy stimulating growth 4 this view was tied to another of keynes theories geared toward preventing deep economic depressions many economists have criticized keynes approach they argue that businesses responding to economic incentives will tend to return the economy to a state of equilibrium unless the government prevents them from doing so by interfering with prices and wages and making it appear as though the market is self regulating on the other hand keynes who was writing while the world was mired in a longstanding period of deep economic depression was not as optimistic about the natural equilibrium of the market he believed that the government was in a better position than market forces when it came to creating a robust economy keynes proposed that the government spend more money and cut taxes which would increase consumer demand in the economy this would in turn lead to an increase in overall economic activity and a reduction in unemployment 2keynesian economics and fiscal policythe multiplier effect developed by keynes student richard kahn is one of the chief components of keynesian countercyclical fiscal policy according to keynes theory of fiscal stimulus an injection of government spending eventually leads to added business activity and even more spending this theory proposes that spending boosts aggregate output and generates more income if workers are willing to spend their extra income the resulting growth in gross domestic product gdp could be even greater than the initial stimulus amount 5the magnitude of the keynesian multiplier is directly related to the marginal propensity to consume spending by consumers becomes income for businesses that then spend on equipment worker wages energy materials purchased services taxes and investor returns workers income can then be spent and the cycle continues keynes and his followers believed that individuals should save less and spend more raising their marginal propensity to consume to effect full employment and economic growth keynes fiscal stimulus theory was the dominant paradigm in academic economics for decades eventually though other economists such as milton friedman and murray rothbard showed that the keynesian model misrepresented the relationship between savings investment and economic growth 6 many economists still rely on multiplier generated models although most acknowledge that fiscal stimulus is far less effective than the original multiplier model suggests the fiscal multiplier commonly associated with the keynesian theory is one of two broad multipliers in economics the other multiplier is known as the money multiplier this multiplier refers to the money creation process that results from a system of fractional reserve banking 7 the money multiplier is less controversial than its keynesian fiscal counterpart according to the multiplier effect one dollar spent in fiscal stimulus eventually creates more than one dollar in growth this appeared to be a coup for government economists who could now provide justification for politically popular spending projects on a national scale keynesian economics and monetary policykeynesian economics focuses on demand side solutions to recessionary periods the intervention of government in economic processes is an important part of the keynesian arsenal for battling unemployment underemployment and low economic demand the emphasis on direct government intervention in the economy often places keynesian theorists at odds with those who argue for limited government involvement in the markets wages and employment keynesians argue are slower to respond to the needs of the market and require government intervention to stay on track furthermore they argue prices do not react quickly and change only gradually when monetary policy interventions are made giving rise to a branch of keynesian economics known as monetarism 8if prices are slow to change this makes it possible to use the money supply as a tool and change interest rates to encourage borrowing and lending lowering interest rates is one way that governments can meaningfully intervene in economic systems thereby encouraging consumption and investment spending 8short term demand growth initiated by interest rate cuts reinvigorates the economic system and restores employment and demand for services the new economic activity then feeds continued growth and employment 2without intervention keynesian theorists believe this cycle is disrupted and market growth becomes more unstable and prone to excessive fluctuation keeping interest rates low is an attempt to stimulate the economic cycle by encouraging businesses and individuals to borrow more money they then spend the money that they borrow this new spending stimulates the economy lowering interest rates however does not always lead directly to economic improvement monetarist economists focus on managing the money supply and lowering interest rates as a solution to economic woes but they generally try to avoid the zero bound problem as interest rates approach zero stimulating the economy by lowering interest rates becomes less effective because it reduces the incentive to invest rather than simply hold money in cash or close substitutes like short term treasurys 9interest rate manipulation may no longer be enough to generate new economic activity if it can t spur investment and the attempt at generating economic recovery may stall completely this is a type of liquidity trap | |
when lower interest rates fail to deliver results keynesian economists argue that other strategies must be employed primarily fiscal policy other interventionist policies include direct control of the labor supply changing tax rates to increase or decrease the money supply indirectly changing monetary policy or placing controls on the supply of goods and services until employment and demand are restored 2 | keynesian theorists argue that economies do not stabilize themselves very quickly and require active intervention that boosts short term demand in the economy 8keynesian economics and the 2007 08 financial crisisin response to the great recession and financial crisis of 2007 2008 congress and the executive branch undertook several measures that drew from keynesian economic theory the federal government bailed out debt ridden companies in several industries including banks insurers and automakers it also took into conservatorship fannie mae and freddie mac the two major market makers and guarantors of mortgages and home loans in 2009 president obama signed the american recovery and reinvestment act an 831 billion government stimulus package designed to save existing jobs and create new ones it included tax cuts credits and unemployment benefits for families it also earmarked expenditures for healthcare infrastructure and education these stimulus measures and federal interventions helped america s economy recover preventing the great recession from becoming another full blown depression who was john maynard keynes john maynard keynes 1883 1946 was a british economist best known as the founder of keynesian economics and the father of modern macroeconomics keynes studied at one of the most elite schools in england the king s college at cambridge university earning an undergraduate degree in mathematics in 1905 3 he excelled at math but received almost no formal training in economics | |
how does keynesian economics differ from classical economics | according to keynes classical economics held that swings in employment and economic output create profit opportunities that individuals and entrepreneurs have an incentive to pursue eventually correcting imbalances in the economy 4in contrast keynes argued that during recessions business pessimism and certain characteristics of market economies would exacerbate economic weakness and cause aggregate demand to plunge further keynesian economics holds that during such difficult periods governments should undertake deficit spending to make up for the decline in investment and boost consumer spending to stabilize aggregate demand 2 | |
what is monetarism | monetarism is a macroeconomic theory stating that governments can foster economic stability by targeting the growth rate of the money supply closely associated with economist milton friedman monetarism is a branch of keynesian economics that emphasizes the use of monetary policy over fiscal policy to manage aggregate demand which contrasts with the theories of most keynesian economists 8the bottom linejohn maynard keynes and keynesian economics were revolutionary in the 1930s and did much to shape post world war ii economies in the mid 20th century his theories came under attack in the 1970s saw a resurgence in the 2000s and are still debated today keynesian economics recognizes the role of government in sparking aggregate demand for instance federal spending and tax cuts leave more money in people s pockets which can stimulate demand and investment unlike free market economists keynesian economics welcomes limited government intervention and stimulus during times of recession | |
what is a keynesian put | a keynesian put is an optimistic investor outlook that is based on the expectation that a specific investment and the financial markets in general will soon benefit from fiscal stimulus measures for example an investor eyeing a proposal for massive government spending to reduce greenhouse gas emissions like the one contained in a 2021 federal budget resolution might consider a keynesian put strategy related to the stocks of electric bus manufacturers or solar panel companies fiscal stimulus can include increased government spending reduced taxes or federal reserve monetary policy easing understanding the keynesian putthe term keynesian put was coined by analysts at bank of america merrill lynch in 2016 its name is a reference to the economic theories of the influential 20th century british economist john maynard keynes who was a proponent of government spending to boost a lagging economy the term also is a playful reference to the greenspan put a term coined in 1998 to describe the accommodative monetary policies used by then federal reserve chair alan greenspan to avoid recession proactive monetary policies such as a cut in the prime lending rate are intended to stimulate the economy by encouraging more borrowing by businesses and consumers a keynesian put is based on confidence that the government will spend to maintain economic growth since the 2007 2008 economic crisis there has been a growing expectation that governments around the world will aggressively use their spending power to boost their economies that almost inevitably supports stock prices example of a keynesian putthe american rescue act of 2021 poured 1 2 trillion in federal money into the economy in order to offset the damage done to americans and to american businesses by the covid 19 pandemic an investor with a keynesian put frame of mind might consider where exactly all of that money was going here s where some of it went those direct payments to taxpayers went straight into the economy in the form of consumer spending and infrastructure spending means large scale government purchases of goods and equipment this goes some way towards explaining why the s p 500 index a reliable indicator of the overall health of american big business rose from 3 870 at the beginning of march 2021 to 4 468 in mid august 2021 despite the continuing disruption of the covid 19 pandemic the effect of the keynesian putthe effects of the keynesian put are hard to quantify but they re also hard to deny in the short term infrastructure spending to improve roads bridges airports hospitals and high speed internet increase corporate profits create new jobs and increase gross domestic product however increased government spending also raises the deficit higher potentially leading down the road to higher taxes and inflation the keynesian put therefore is not a phenomenon that is particularly attractive to bondholders | |
what is the keystone xl pipeline | the keystone xl pipeline was to transport oil from alberta canada to refineries in the united states the final phase of the keystone xl pipeline was to be developed by tc energy formerly transcanada corporation which has constructed several other pipelines between canada and the united states since 2010 1in march 2019 then president donald trump granted a presidential permit allowing construction of the oil pipeline that was to run through the international border of the united states and canada however on jan 20 2021 president biden signed an executive order revoking the permit of the keystone xl pipeline 23understanding the keystone xl pipelinethe keystone pipeline was proposed by transcanada corp on feb 9 2005 in a press release which said transcanada is in the business of connecting energy supplies to markets and we view this opportunity as another way of providing a valuable service to our customers converting one of our natural gas pipeline assets for oil transportation is an innovative cost competitive way to meet the need for pipeline expansions to accommodate anticipated growth in canadian crude oil production during the next decade 1the first phase of the pipeline goes from hardisty alberta to the junction at steele city nebraska and on to the wood river refinery in roxana illinois and the patoka oil terminal hub north of patoka illinois section two runs from steele city nebraska south through kansas to the oil hub and tank farm in cushing oklahoma then further south to nederland texas to serve refineries in the port arthur texas area the third phase is the houston lateral pipeline which will transport crude oil from the pipeline in liberty county texas to refineries and terminals in the houston area 54in nov 2015 president barack obama announced his administration would not grant permits for the construction of this pipeline in order to further their commitment to fighting climate change 6 in his first week at the oval office president trump signed an executive order clearing the way for the pipeline project 7 the republican party had believed that the construction of the pipeline will create more jobs and provide a boost to the economy on jan 20 2021 president joe biden rescinded the construction permit for the keystone xl pipeline tc energy said it was stopping construction earlier the same day 3 | |
how the keystone pipeline works | the keystone system transports diluted bitumen and synthetic crude oil from alberta through montana south dakota nebraska kansas and oklahoma to refineries located in texas illinois and oklahoma canada has large reserves of oil locked in oil sands this oil is considered heavy oil which requires a different refining process from other types of oil the production of heavy oil releases particulate matter such as soot as well as chemicals such as sulfides hydrogen cyanide and sulfur the finished keystone xl pipeline is estimated to be able to carry over 800 000 barrels of oil a day 8 the keystone pipeline has been criticized by environmental groups politicians and residents of states through which the pipeline passes these groups have raised concerns about the proposed route s proximity to the sandhill region of nebraska and the ogallala aquifer the latter of which provides a significant portion of the water used to water crops in the united states 9 the bitumen carried by the pipeline to the united states will likely result in higher greenhouse gas emissions 10 for example the national resource defense council nrdc has filed lawsuits in 2017 2019 and in july of 2020 to stop the construction of the pipeline 11 according to the nrdc tar sands oil is much thicker and more corrosive than typical crude oil and is more prone to leaks and spills through the pipeline the group stated that the most recent spill in oct 2019 resulted in 378 000 gallons of oil spilling in north dakota 10 proponents of the pipeline say that it will increase the supply of oil to the united states and that oil coming from a friendly neighboring country increases security | |
what is a kickback | a kickback is an illegal payment intended as compensation for preferential treatment or any other type of improper service received the kickback may be money a gift credit or anything of value paying or receiving kickbacks is a corrupt practice that interferes with an employee s or a public official s ability to make unbiased decisions kickbacks are often referred to as a type of bribery | |
how a kickback works | kickbacks can take many forms but they all feature some sort of collusion between two parties the bookkeeper for a business or government office might approve an invoice for goods knowing that the bill is inflated the seller of the goods might then pay the bookkeeper part of the difference or some other kind of reward kickbacks can also be used to buy a positive recommendation for the kickback provider a government employee who s responsible for managing contractors on an infrastructure project such as the building of a bridge might receive a kickback for choosing one contractor over another this may result in a better qualified contractor not winning the bid kickback schemes are among the most difficult white collar crimes to detect and investigate procurement contracts can be fertile ground for kickback schemes contractors who are interested in winning the business are typically required to bid against each other in the granting of a government contract such as for office equipment rather than playing fair a contractor might reach out to a procurement officer and indicate that the officer would be rewarded if the contractor were to win the reward might be cash concert tickets or anything else of desired value kickback warning signsthese are some common kickback warning signs they don t necessarily mean that anything nefarious is going on but the more of them there are the greater the likelihood of a kickback scheme kickbacks increase the cost of doing business in countries around the world they also form the basis for much of the world s government corruption companies that are looking to supply products or services to countries known for corruption may find that they have to pay numerous officials to be considered for a contract the perception that a kickback scheme will go unpunished or that punishment will be light is a primary driver for officials who are willing to take bribes they may be poorly paid and see kickbacks as a way to supplement a meager salary in some cases the u s foreign corrupt practices act makes bribing foreign officials illegal for all companies listed with the securities and exchange commission sec any company organized in the united states or any citizen or resident even if it s the local custom 1examples of a kickbackwall street brokers sometimes route all orders to a particular exchange even though they re required by law to execute trades with the exchange that offers the best terms or best execution for their clients the broker may take a kickback in exchange for routing all of their trades to a particular exchange rather than choosing one that offers the most competitive price and has the highest likelihood of completing the trade promptly this can ultimately lead to slower execution and higher transaction costs for clients the industry refers to the practice as rebates these rebates may amount to only a fraction of a cent of each share traded but considerable sums can be accrued over time kickbacks can take the form of rebates or fraudulent billing for nonexistent services in the advertising business clients pay the price with higher costs or a lower level of service than they normally would expect for their money shrinking agency fees and a hard to understand digital marketplace provide the motivation and cover for such actions | |
what is the anti kickback statute | the anti kickback statute aks is a federal law that governs medical referrals in the u s specifically those for services that are paid for partly or entirely by medicare and medicaid healthcare providers are prohibited from accepting gifts or any other financial incentives for making referrals or for ordering prescriptions or services the law also applies to patients and staff 2 | |
are kickbacks common in real estate | no business is truly immune from kickbacks they typically occur in the real estate industry in the form of referrals made to homebuyers sending them to certain title inspection and or escrow companies the real estate settlement procedures act respa prohibits these types of transactions when they involve federally related mortgage loans 3 | |
what s the difference between a referral fee and a kickback | these terms can vary by business type but a referral fee that s paid between two licensed real estate professionals is legal in some states the fee is usually limited to no more than 25 of commissions and other restrictions apply a referral fee becomes a kickback and is illegal when it s paid by a real estate professional to a service provider 4the bottom lineit s illegal to pay or receive a kickback in the u s and this rule prevails over a wide range of industries and professions a kickback is a bid to receive preferential treatment and it doesn t necessarily have to be transmitted in the form of money it can be anything of value such as concert tickets that are impossible to buy on the legal market always ask questions if you spot any warning signs as a consumer or at the very least switch to another service provider of your own choosing | |
what is a kicker | a kicker is a right exercisable warrant or other feature that is added to a debt instrument to make it more desirable to potential investors by giving the debt holder the potential option to purchase shares of the issuer in real estate a kicker is an added expense that must be paid on a mortgage in order to get a loan approved an example would be an equity stake in the receipts of a retail or rental property a kicker is also called a sweetener or a wrinkle | |
how a kicker works | kickers are features that are added to get the deal done as they are exclusively for the benefit of lenders and used to add to their expected return on investment roi for example a lender may be wary of loaning money to a startup company which may need the money to finance early stage operations without a financial track record showing steady sales growth and profits the startup may face an uphill battle in obtaining funding the young company may need to structure an equity deal to entice the lender offering a kicker of equity ownership in the company in return for loaning money to the company the lender will receive a stake in the company and a certain percentage of future profits equity kickersin effect a kicker is an extra incentive to encourage investors to purchase debt securities such as a bond or preferred share when a bond has an embedded option that may be exercised by the bondholder to purchase equity at the issuing firm at a discount price the option is said to be a kicker an investor will be incentivized to purchase a bond with a kicker as this allows the investor to participate in any increase in the value of equity ownership two common types of equity kickers are a convertible feature on some bonds that allows the bonds to be exchanged for shares of stock and warrants to purchase stocks that are sold in combination with a new bond issue equity kickers are often used for leveraged buyouts lbos management buyouts mbos and equity recapitalizations since they are considered too risky for traditional financing offered by senior secured lenders a company that adds a kicker for example a rights offering to a bond issue is only doing so to get the entire issue into the hands of investors the kicker may or may not actually be usable at any time during the life of the bond often a certain breakpoint must be reached such as a stock price above a certain level before the kicker has any real value for example a bondholder that has the right to purchase shares in the company for 20 per share will only exercise this right if the shares are trading above 20 otherwise there s no financial advantage to purchasing the shares real estate kickersin real estate loans a lender may be offered in addition to interest on the loan a share in the total income or gross rental receipts that will be generated from the investment property being financed if the income exceeds a specified amount this benefit may be offered by the borrower or demanded by the lender to sweeten the loan deal if the borrower is unable to make a large down payment on the property or there is some circumstance that makes the transaction a credit risk the lender may require some type of equity kicker or percentage ownership in the property for example the lender may agree to a real estate investment loan provided they receive a percentage of the sales proceeds after the borrower renovates the property and resells it at a higher price special considerationsthe term kicker should not be confused with the term kickback which is an illegal payment given as compensation for preferential treatment in real estate transactions individuals and companies that violate the prohibition against kickbacks can face civil and criminal liability from a legal viewpoint all settlement costs have to be disclosed in consumer loans as part of the finance charges congress enacted the real estate settlement procedures act respa which became effective in june 1975 to protect consumers from abusive settlement practices such as kickbacks respa requires lenders mortgage brokers or servicers of home loans to provide borrowers with disclosures regarding the nature and costs of the real estate settlement process 1 | |
what is a kicker pattern | a kicker pattern is a two bar candlestick pattern that predicts a change in the direction of an asset s price trend this pattern is characterized by a sharp reversal in price over the span of two candlesticks traders use it to determine which group of market participants is in control of the direction the pattern points to a strong change in investors attitudes toward a security the change in direction usually occurs following the release of valuable information about a company industry or economy understanding the kicker patternthe stock market is characterized by competing buyers bulls and sellers bears the constant tug of war among these players is what forms candlesticks patterns candlestick charting originated from a technique developed in japan in the 1700s that tracked the price of rice candlesticks are a suitable technique for trading any liquid financial asset such as stocks futures and foreign exchange the kicker pattern is considered one of the most reliable reversal patterns and usually indicates a dramatic change in a company s fundamentals the kicker pattern is a reversal pattern and it differs from a gap pattern which tends to show a gap up or down and stay in that trend the patterns look similar but each implies something different kicker patterns are either bullish or bearish bullish kickers start with a bearish candle and then show a bullish gap up bearish kickers start with a bullish candle and then show a bearish gap down image by julie bang investopedia 2020 | |
how the kicker pattern works | to traders observing the kicker pattern it may seem like the price has moved too quickly and they may wait for a pullback however those traders may find themselves wishing they had entered a position when they originally identified the kicker pattern while the kicker pattern is one of the strongest bull or bear sentiment indicators the pattern is rare most professional traders do not rapidly overreact in one direction or another however if and when the kicker pattern presents itself money managers are quick to take notice the kicker pattern is one of the most powerful signals available to technical analysts its relevance is magnified when it occurs in overbought or oversold markets the two candles behind the pattern take on visible significance the first candle opens and moves in the direction of a current trend and the second candle opens at the same open of the previous day a gap open and then heads in the opposite direction of the prior day s candle the bodies of the candles are opposite colors on many trading platforms creating a colorful display of the dramatic change in investor sentiment because the kicker pattern occurs only after a significant change in the investor attitude the indicator is often studied with other measures of market psychology or behavioral finance example of a bearish kicker candlestick patternthe bearish kicker candlestick chart pattern s reliability is high when it is formed at the uptrend or formed in an overbought area on day 1 one candlestick continues an uptrend and is therefore bullish in nature it has no significance on its own when formed in an uptrend on day 2 a bearish candlestick emerges the candlestick opens at the same price as the previous day or a gap down and then heads in the opposite direction of the day 1 candle for this pattern to be valid the second day s candle should open at or lower than the first day s candle traders commonly expect that a gap down before the second day s candle will increase the chances that prices will continue to fall after the second day is done | |
what is kicking the tires | kicking the tires is a colloquial expression that refers to performing minimal research into an investment as opposed to conducting a thorough and rigorous analysis the process usually includes a cursory reading of the company s annual report looking at its historical earning and revenue performance considering the company s competitive strengths and weaknesses and reading news articles or headlines about the company understanding kicking the tireskicking the tires gets its name from shopping for an automobile a car shopper who shows some interest in a car probably will not look under the hood or perform a serious comparative analysis versus similar models however this shopper usually takes a walk around the car from front to back to get a look and kick the tires this shopper is not considered a serious buyer or a hot prospect similarly a tire kicker in the investment world is not ready to make a decision on an investment a stock investor often examines the company s balance sheet previous cash flow statements and income statements and also wants to read several research reports but is not ready to invest an investor who is kicking the tires may simply take a look at a stock s price earnings ratio and other simple valuation metrics versus those of its peers kicking the tires typically includes taking a cursory look at a company s price chart to get a sense for past performance those who employ technical analysis also scan for patterns and potential entry and exit points based on a study of both price and volume kicking the tires also applies to a broad range of investments such as stocks bonds mutual funds hedge funds closed end funds money markets certificates of deposit and even private equity and real estate investments examples of kicking the tiresfor example someone thinking about putting money in a hedge fund starts kicking the tires by reading advertising material provided by the investment management company but does not yet look up the investment manager s disciplinary history on the finra web site similarly someone kicking the tires on a 12 month cd looks up interest rates online but does not read the fine print regarding penalties restrictions and the automatic rollover policy pros and cons of kicking the tireskicking the tires is how serious analysis often begins at times investors who start by kicking the tires continue on to more rigorous analysis that leads to interesting finds either within their normal investment universe or sometimes outside of where they normally look for ideas depending on an investor s strategy however kicking the tires too often sometimes leads to diversions and poor investments constantly kicking the tires on new ideas also wastes time for this reason it s sometimes preferable for investors to start with a strict set of criteria to narrow a pool of potential investments rather than randomly kicking tires | |
what is the kiddie tax | the kiddie tax is a tax imposed on income unrelated to employment earned by individuals 18 years of age or under or dependent full time students under age 24 introduced as part of the tax reform act of 1986 it is designed to stop parents from registering investments in their children s name to avoid paying taxes the kiddie tax threshold adjusts each year for inflation in 2023 unearned income surpassing 1 250 is subject to the child s tax rate and anything above 2 500 is taxed at the guardian s tax rate 1 | |
how the kiddie tax works | the kiddie tax is imposed on individuals under a certain age whose investment and unearned income is higher than an annually determined threshold it applies to all children aged 18 and under at the end of the tax year as well as children who are dependent full time students between the ages of 19 and 24 2the kiddie tax does not apply to children under 24 years of age who are married and file joint tax returns this rule is designed to prevent parents from exploiting a tax loophole where their children are given large gifts of stock in this case the child would then realize any gains from the investments and would be taxed at a far lower rate compared to the rate the guardians face for their realized stock gains the kiddie tax includes unearned income a child receives interest dividends capital gains rent and royalties any salary or wages the child earns is not subject to the kiddie tax adult children who turn 19 or 25 in the case of dependent full time students by the end of the tax year are not subject to the kiddie tax 2 | |
what is the kiddie tax rate for 2023 | under the kiddie tax law all unearned income over the threshold is taxed at the parent s marginal income tax rate rather than the child s tax rate in the 2023 tax year unearned income under 1 250 qualifies for the standard deduction the next 1 250 is taxed at the child s tax rate which is very low sometimes 0 and then anything over is taxed at the guardian s tax rate which could be as high as 37 12the irs taxes any income exceeding the predetermined threshold at the parent s tax rate | |
how is kiddie tax reported | there are generally two ways to go about reporting a child s unearned income the first option can be used when the child s only income is interest and dividend income including capital gains and totals less than 11 000 if that s not the case the second route will have to be taken presumably with the help of the parent 2history of the kiddie taxthe tax law originally only covered children under 14 years of age children under the age of 14 cannot legally work which means that any income they received usually came from dividends or interest from bonds however the tax authorities realized that some guardians would take advantage of the situation and then give stock gifts to their older 16 to 18 year old children 3the tax cuts and jobs act of 2017 temporarily changed the kiddie tax to use the tax rates that apply to estates and trusts rather than the tax rate of the child s parents 4 however the further consolidated appropriations act 2020 retroactively changed it back to the parent s tax rate for 2018 and 2019 returns taxpayers could use either the estate tax rates or the parent s take rate for calculating the kiddie tax for 2020 and beyond the parent s tax rate applies 52who is subject to kiddie tax the kiddie tax is imposed on individuals under 18 years old or dependent full time students under 24 years old whose investment and unearned income is higher than an annually determined threshold | |
what is the purpose of the kiddie tax | the kiddie tax was created under the tax reform act of 1986 to stop parents from registering income producing investments in their children s name to pay fewer taxes income received from investments is generally taxed at ordinary income tax rates which is based on how much an individual earns | |
what percentage is kiddie tax | in 2023 unearned income under 1 250 qualifies for the standard deduction the next 1 250 is then taxed at the child s marginal tax rate and then all amounts over 2 500 are taxed at the parent s tax rate which can vary from 10 to 37 | |
how do i avoid kiddie tax | parents or grandparents can avoid the kiddie tax by keeping the child s annual investment income at 2 500 or less this can be accomplished in a number of ways including investing in assets that don t pay much in the way of income or dividends or in bonds where the payment of interest can be deferred until the child is no longer subject to the kiddie tax the bottom linethe kiddie tax a tax imposed on individuals under a certain age whose unearned income is higher than an annually determined threshold is designed to put an end to an old tax loophole and is something parents need to be aware of if you are investing on behalf of a child consider speaking to a financial advisor or tax advisor firstly it s important to be aware of the rules and your obligations and secondly there are ways to limit and or avoid this liability | |
what is kids in parents pockets eroding retirement savings kippers | kids in parents pockets eroding retirement savings kippers is a slang term for adult children who are still living at home with their parents even after finishing school and reaching working age their parents face the challenges of managing their own finances and planning for retirement while dealing with the added expense of housing and feeding their adult offspring kippers are also known as boomerang children understanding kids in parents pockets eroding retirement savings kippers according to some studies most parents find that having kippers in the house is a pleasant experience they like living with their adult children and the opportunity to build deeper relationships with them now that they are adults the extra time spent at home allows for a closer relationship in many instances however it usually results in the parents spending more and saving less than they otherwise would as they approach retirement age additional costs include extra groceries for feeding additional mouths continuing to stay in a larger house as opposed to downsizing when the kids have moved out and other possible costs depending on the situation of the child such as an additional car or spending money they may also postpone retirement itself working many more years just to support their children contrast this to the situation of a married dual income couple with no children at home whose discretionary income is often higher and who find saving for retirement easier this demographic group is sometimes referred to as dual income no kids dinks millennials on the coucha pew research center study in 2016 found that nearly one third of 18 to 34 year olds lived with at least one parent up from just 20 in 1960 for the first time in 130 years shacking up with mom and or dad was the most common living arrangement for young adults edging out being married cohabitating living alone or living with someone other than a parent consumer reports noted 12in 2020 pew research showed that 52 of young adults in the u s were living with their parents this was a direct result of the covid 19 pandemic however the number was still high before the pandemic in february 2020 at 47 3for parents struggling to save for retirement and contain costs consumer reports offered these tips | |
why are they here | there are many factors that result in adult children living with their parents millennials were hard hit with the financial crisis of 2008 and now by the pandemic caused by the coronavirus these two events caused many young adults to be laid off losing out on time to build savings in addition the jobs many younger people can get don t pay well enough to allow them to live on their own combine this with the large levels of student debt in the u s it is simply just cost effective to live with your parents rather than on your own particularly in such cities like new york whose rents have skyrocketed in the last twenty years | |
what is the kijun line base line | the kijun line also called the base line or kijun sen is one of five components that make up the ichimoku cloud indicator the kijun line is typically used in conjunction with the conversion line tenkan sen to generate trade signals when they cross these signals can be further filtered via the other components of the ichimoku indicator 1the kijun line is the mid point of the high and low price over the last 26 periods the formula for the kijun line base line is | |
what does the kijun line tell you | the kijun line or base line is part of the ichimoku cloud indicator the ichimoku cloud is a technical indicator that defines support and resistance measures momentum and provides buy and sell signals its developer goichi hosoda designed the indicator to be a one look equilibrium chart 2there are several different lines included in the ichimoku cloud indicator while the cloud made up of leading span a and b is the most prominent feature of the ichimoku cloud indicator the kijun line generates trading signals when it is crossed by the tenkan line the tenkan line is the 9 period price mid point it thus moves quicker than the kinjun line which looks at 26 periods | |
when the tenkan line crosses below the kijun line it signals momentum has shifted to the downside and may be interpreted as a sell signal | buy or sell signals should be used within the context of the other components of the ichimoku indicator for example a trader may only wish to trade the buy signals if the price is also above the cloud or leading span a | |
when the tenkan line and kijun line are crossing back and forth the price lacks a trend or is moving in a choppy fashion and therefore the crossovers will not produce reliable trade signals | on its own the kijun line can also be used for analyzing price momentum when the price is above the kijun line it means the price is above the 26 period mid point and therefore has an upward bias if the price is below the kijun line it is below the midpoint price and therefore has a downward bias example of a kijun linethe following chart shows an example of an ichimoku cloud indicator applied to the spdr s p 500 etf spy in the chart above the kijun line is red and the tenkan line is blue after a brief selloff the tenkan moved above the kijun in early 2016 this was a potential buy signal the two lines did not cross again until 2018 which would have provided the sell signal for most of this time the price stayed above the kijun line and the cloud helping to confirm the uptrend the difference between the kijun line and a moving averagethe kijun line is a moving mid point based on the high and low over a set number of periods it is calculated by adding the high and low and dividing by two a moving average ma is different it sums up the closing prices of a set number of periods and then divides that by the number of periods a 26 period kijun line and a 26 period ma will produce different values and therefore provide traders with different information the limitations of using the kijun lineunless there is a very strong trend the kijun line will often appear near the price when the kijun line is often intersecting or near the price it is not as useful for helping to assess the trend direction the same goes for crossovers with the tenkan line when the price trends strongly crossover signals may be quite profitable yet many crossovers signals will be unprofitable if the price fails to trend following the crossover the kijun line is reactionary in that it shows what price has done in the past there are no predictive qualities inherent in the indicator s calculation the kijun line should ideally be used in conjunction with the other elements of the ichimoku cloud indicator along with price action and other technical indicators | |
what is the kijun sen base line | the kijun sen or base line is an indicator and important component of the ichimoku kinko hyo method of technical analysis which is also known as the ichimoku cloud the kijun sen is the midpoint price of the last 26 periods and therefore an indicator of short to medium term price momentum the indicator aids in assessing the trend and can also be useful for identifying trading opportunities when combined with the other components of the ichimoku cloud the formula for the kijun sen base line is kijun sen base line 1 2 26 period high 26 period low begin aligned text kijun sen base line frac 1 2 left text 26 period high text 26 period low right end aligned kijun sen base line 21 26 period high 26 period low | |
what does the kijun sen base line tell you | on its own kijun sen shows the midpoint price for the last 26 periods similar to a moving average when the price is above the base line it indicates the price is above the midpoint and therefore short term price momentum is up this is further confirmed if the kijun sen line is angled upwards | |
when the price is below the base line and especially if kijun sen is angled downwards that indicates price momentum is to the downside as the price is below the 26 period midpoint while 26 periods is typically used for this calculation this can be altered to suit individual preference a smaller number of periods such as 15 will track the price more closely a larger number of periods such as 45 will not track the price as closely | the kijun sen is nearly always used alongside the tenkan sen conversion line to help gauge direction changes in price and to generate trade signals tenkan sen is the 9 period price midpoint since it is a short term indicator it tracks price more closely and responds quicker to price changes therefore when tenkan sen crosses above kijun sen it indicates that price momentum is picking up steam to the upside some traders use this as a buy signal this is a bullish crossover | |
when gauging the trend or using crossovers the information provided should be used within the context of the entire ichimoku cloud indicator for example if the price is above the cloud a bearish crossover may still be used to sell a long position but it likely wouldn t be used to enter a short position | the difference between kijun sen base line and a simple moving average sma the kijun sen is a midpoint of the high and low price over the last 26 periods this is not an average a simple moving average is an average price over a set number of periods calculated by adding up the closing prices of those periods and then dividing the total by the number of periods a 26 period base line and a 26 period sma will produce different values and thus provide different information to the trader the limitations of using kijun sen base line unless there s a lot of recent price movement enough to pull the price away from the 26 period midpoint the kijun sen will often trade near and intersect with the price at times like these it is not an ideal tool for helping with trend direction if the price is crossing the base line repeatedly the other ichimoku indicators are needed to provide clarity on the larger or longer term trend direction while some crossover signals with the tenkan sen will result in large and profitable price moves others may not the price may fail to move as expected or the indicator may cross back the other way generating a false signal while the kijun sen does provide some information on its own it is best used in conjunction with the other ichimoku indicators in addition traders are also encouraged to use price action analysis other technical tools and fundamental analysis | |
what is a kill | a kill is a request to cancel a trade between its placement and its fulfillment breaking down killkill requests occur after a trader places an order but before it gets filled by a counterparty investors may wish to kill trades because of market movements that change the potential profitability of a trade because they placed the order accidentally or simply because they changed their mind after placing the trade the success of the kill depends on the type of trade and the disposition of the markets many trades move from placement to execution almost instantaneously thanks to computer trading limiting the amount of time available for a successful kill when exchanges experience heavy trade volumes investors may also run into difficulty killing trades because timely notification about the trade s fulfillment or cancellation can be delayed placing a trade makes the investor or trader liable for the order on fulfillment regardless of whether the trader receives timely notification kill orders issued or received after fulfillment of a trade will not be honored and will not change the trader s responsibility to follow through on the placement order killing market and limit orderssince a successful kill order requires a trader to submit it before the order gets fulfilled traders have much more leeway on timing for placements that delay fulfillment or which place restrictions on fulfillment for example some traders who wish to fulfill a large order at a specific price will issue a fill or kill order depending on the exchange and the order type specified fill or kill orders take place in a single large transaction that either fills the entire order or as much of the order as possible in either case the order must fill at the specified price and the unfilled balance in whole or in part gets killed if no counterparties come forward limit orders on the other hand specify an amount of time during which an order fulfills if the security in the trade hits a specific price point for example an investor may use a stop loss order to ensure a security that falls in price gets sold before it loses too much value an investor may also use a take profit order to set a higher price point at which the investor wants a sale to take place in either case the order does not get fulfilled until the contingent event happens and therefore a trader or investor could more easily kill the trade | |
what is a killer application | a killer application or a killer app is a software program with a user interface perceived as innovative enough to influence computing trends and sales the term dates to the early development of personal computers and software in the 1980s when accounting database and word processing applications were first being developed for mass use the term killer application may be derived from the fact that such an application was perceived to be innovative enough to overcome the competition and spur sales of both applications and computers running operating systems advanced enough to accommodate the latest innovations understanding killer applicationskiller applications can be instrumental in driving rapid growth in sales of the platform on which they are based they are usually a product or service that is a primary source of competitive advantage for a company a prime example is itunes which helped apple computer overcome inertia as a niche computer manufacturer to expand into the broader entertainment markets other recent killer apps include whatsapp snapchat and tiktok you can see the might of their popularity from the number of their users the intensity of their use and sometimes the valuation of the firms behind them while some companies that develop killer applications can enjoy substantial margins and profits for many years this competitive advantage does not always last for long and short product life cycles are the norm rather than the exception as businesses increasingly adopted stand alone computers connected by local networks or mainframes both computer and software manufacturers developed more evolved applications they allowed users to execute tasks without needing to know programming language or commands to save a file or send electronic communications over time applications such as microsoft word and excel became the standard for businesses overshadowing earlier competition such as word perfect or lotus 123 a similar dynamic played out as internet browsers and email applications competed for users worldwide the value of killer applicationstypically a killer application constitutes such a desirable feature that it drives sales and adoption of the platform on which it runs such as operating systems or specific devices the value that the killer application brings to the user may even help other perceived shortcomings of the platform and can raise the switching cost for consumers to leave the platform increasing longevity and brand loyalty for example the popular halo first person shooter game series is widely credited as the killer application that built the success of microsoft s xbox game consoles it was so popular that it spawned the derivative term halo killer which is meant to be a first person shooter good enough to rival or unseat halo in the modern economy development and reliance upon killer applications extends beyond just technology and computing businesses or bridge the gap between pure tech businesses and more traditional goods and services these are intended to drive sales and growth of the overall business platform in the same way as killer apps historically have the ubiquity of smartphones and the always on always connected culture means that products and industries from healthcare delivery to restaurant food service to fitness centers are all seeking their own killer app to drive online and in person traffic to their doorstep these can include everything from online sales and customer appointment scheduling to online social platforms for customers and downloadable apps that interface directly with a physical product using or offering software that complements the goods and services that a company provides is now key to driving a superior customer experience and competitive advantage | |
what is a killer application | a killer application or a killer app is a software program with a user interface perceived as innovative enough to influence computing trends and sales the term dates to the early development of personal computers and software in the 1980s when accounting database and word processing applications were first being developed for mass use the term killer application may be derived from the fact that such an application was perceived to be innovative enough to overcome the competition and spur sales of both applications and computers running operating systems advanced enough to accommodate the latest innovations understanding killer applicationskiller applications can be instrumental in driving rapid growth in sales of the platform on which they are based they are usually a product or service that is a primary source of competitive advantage for a company a prime example is itunes which helped apple computer overcome inertia as a niche computer manufacturer to expand into the broader entertainment markets other recent killer apps include whatsapp snapchat and tiktok you can see the might of their popularity from the number of their users the intensity of their use and sometimes the valuation of the firms behind them while some companies that develop killer applications can enjoy substantial margins and profits for many years this competitive advantage does not always last for long and short product life cycles are the norm rather than the exception as businesses increasingly adopted stand alone computers connected by local networks or mainframes both computer and software manufacturers developed more evolved applications they allowed users to execute tasks without needing to know programming language or commands to save a file or send electronic communications over time applications such as microsoft word and excel became the standard for businesses overshadowing earlier competition such as word perfect or lotus 123 a similar dynamic played out as internet browsers and email applications competed for users worldwide the value of killer applicationstypically a killer application constitutes such a desirable feature that it drives sales and adoption of the platform on which it runs such as operating systems or specific devices the value that the killer application brings to the user may even help other perceived shortcomings of the platform and can raise the switching cost for consumers to leave the platform increasing longevity and brand loyalty for example the popular halo first person shooter game series is widely credited as the killer application that built the success of microsoft s xbox game consoles it was so popular that it spawned the derivative term halo killer which is meant to be a first person shooter good enough to rival or unseat halo in the modern economy development and reliance upon killer applications extends beyond just technology and computing businesses or bridge the gap between pure tech businesses and more traditional goods and services these are intended to drive sales and growth of the overall business platform in the same way as killer apps historically have the ubiquity of smartphones and the always on always connected culture means that products and industries from healthcare delivery to restaurant food service to fitness centers are all seeking their own killer app to drive online and in person traffic to their doorstep these can include everything from online sales and customer appointment scheduling to online social platforms for customers and downloadable apps that interface directly with a physical product using or offering software that complements the goods and services that a company provides is now key to driving a superior customer experience and competitive advantage | |
what is the kimchi premium | the kimchi premium is the gap in cryptocurrency prices in south korean exchanges compared to other exchanges located globally the kimchi premium is predominantly seen in the price of the cryptocurrency bitcoin btc in other words bitcoin s price might be listed at a higher price on a south korean exchange than on an exchange located in the united states or europe creating an arbitrage opportunity the term kimchi refers to the fermented cabbage dish that is a staple in south korean cuisine understanding the kimchi premiumbitcoin prices can be higher in south korea than on other international exchanges cryptocurrencies like bitcoin are decentralized assets meaning they don t trade on a central exchange unlike equities this means a cryptocurrency can be traded at different prices around the world the price difference becomes a premium when one exchange s prices are higher than another if caught by a trader at the right moment this opportunity is called arbitrage buying and selling an asset on different exchanges to take advantage of price differences when prices on one exchange are consistently higher it becomes known for its premium prices the term kimchi comes from the popular south korean pickled cabbage dish of that name so because bitcoin has generally traded higher on south korean exchanges the arbitrage opportunity became known as the kimchi premium history of the kimchi premiumthe kimchi premium in the cryptocurrency market first appeared in 2016 according to a report by the university of calgary the findings show that between early 2016 and early 2018 the kimchi premium averaged nearly 4 80 and nearly reached 55 in january 2018 1south korea is a popular market for trading cryptocurrencies the popularity could be due to the country s interest in technology and gambling which may have led to open mindedness and early digital currency adoption also leading to the popularity of cryptos is the potential security issues or threats south koreans face from north korea and its leader kim jong un bitcoin and cryptocurrencies tend to be favored in countries or regions that face political uncertainty and geopolitical risks the appeal centers around the decentralized nature of cryptos meaning they re not owned or controlled by a government entity bitcoin s popularity has led in part to price premiums for the cryptocurrency in south korea when compared to the price in other countries a rise in the kimchi premium can indicate increased investment in bitcoin by korean retail investors kimchi premium arbitragesome investors attempt to profit by trading the price differences on different exchanges a process called arbitrage arbitrage is often attempted by currency traders who look for mismatches in exchange rates when identifying arbitrage opportunities | |
when a trader engages in currency arbitrage they place trades based on differences in the quotes for a specific currency pair offered by different brokers rather than placing trades based on the exchange rate movement of the currency pair if executed perfectly this kind of trade can be risk free since the trader buys and sells two or more currencies simultaneously ensuring there is no open currency exposure | arbitrage opportunities are often short lived because as soon investors or their trading algorithms identify the pricing mismatch they place enough trades to make the arbitrage opportunity no longer profitable the arbitrage opportunity that can result from the kimchi premium might be exploited by purchasing bitcoins on an exchange outside south korea and then selling the position on a south korean exchange where its price is higher however south korean traders would first have to exchange their local currency korean won for another currency such as u s dollars to purchase bitcoins on an international cryptocurrency exchange from there they could sell their bitcoins on a south korean exchange for a higher price the process for foreign investors is somewhat easier since they can purchase bitcoins abroad and sell their holdings on a south korean exchange capital controls and kimchi premiumthe kimchi premium could be eliminated by south korean investors if they could quickly take advantage of the arbitrage opportunity south korean investors could buy bitcoins outside the country on international exchanges and sell those positions on local exchanges the result would be a lower price for bitcoin in south korea and an increased price on international exchanges this would then eliminate the arbitrage opportunity however capital controls financial regulations and anti money laundering laws in south korea make the process difficult capital controls are measures taken by central banks and regulatory agencies of governments to restrict the flow of capital or money in and out of a country if a significant amount of capital flees a country due to a geopolitical event or economic upheaval a massive selloff in domestic assets can devastate the local economy the south korean government implemented capital controls in 2010 stemming from the global financial crisis and the european debt crisis the measures were designed to reduce the wild fluctuations or volatility in capital flows that may hurt its economy the result is a time delay when sending money internationally due to additional administrative burdens the amount of money that can move out of the country each year is capped and the transfers must be approved by regulators 2even if regulators approve the transfers the process may take so long that the arbitrage opportunity is no longer available capital controls also limit the inflow of cryptocurrencies by foreign investors which has created a scenario in which south koreans can only use digital currencies in their country south koreans and firms are limited in their international bitcoin purchases if a south korean trader decided to exchange their currency for a foreign currency to purchase a bitcoin on a foreign exchange the transaction amount would likely be capped regulators might even block it if there is suspicion of money laundering the impact of south korean regulation on cryptocurrency trading as well as the threats of a cryptocurrency ban in china may have led to the massive sell off of bitcoin in january 2018 in which bitcoin lost nearly 25 of its value in one week bitcoin and other cryptocurrency prices plummeted as south korea s government signaled that it planned to crack down on cryptocurrency trading at that time south korea was the third biggest market in the world for bitcoin trades behind japan and the united states 3although the south korean government has threatened a complete ban they have also considered alternatives to a complete ban such as having investors pay capital gains taxes they may also require investors to register investment accounts in their own names to combat illicit uses | |
why did a premium on crypto emerge in south korea | it is difficult to move large amounts of foreign money into and out of south korean exchanges and banks have strict reporting requirements for moving funds in and out of the country as a result of the crypto s popularity in the country the prices of certain cryptocurrencies rose as high as 20 above prices elsewhere a phenomenon that has lasted for several years was the kimchi premium associated with illegal money transfers while it was usually assumed that the kimchi premium was innocuous caused by technical limitations of the korean banking system and the popularity of crypto an investigation in the summer of 2022 found that more than 3 4 billion of illegal foreign transactions in the country stemmed from cryptocurrencies 4 | |
is bitcoin banned in south korea | no owning and trading bitcoin on regulated exchanges is legal in south korea the bottom linethe kimchi premium is an arbitrage opportunity where a trader could profit from buying a cryptocurrency on an exchange outside of the country for a lower price and selling in the country for a higher price this price difference has been present for some time but it is difficult to take advantage of it because of the controls the south korean government has in place the comments opinions and analyses expressed on investopedia are for informational purposes only read our warranty and liability disclaimer for more info as of the date this article was written the author does not own cryptocurrency | |
what was kin | kin was the cryptocurrency for the messaging service kik the service was created and maintained by kik interactive kik developed a cryptocurrency for the messenger community and kicked off an initial coin offering to raise funds for it the securities and exchange commission filed charges against kik interactive for an unregistered security offering battling the regulators drained the company s resources and caused them to accept an offer from medialab in 2019 saving the service kik interactive continued to try to save its cryptocurrency kin had special uses within the kik messenger platform users could earn kin for making contributions to the broader kik community and then spend it on various goods and services within the kik platform the cryptocurrency was fully decentralized in july 2023 handed off to the users and as of january 2024 had a market cap of 40 28 million understanding kinkin first launched in september 2017 via an initial coin offering ico raising roughly 100 million in investor funds over about two weeks upon its launch the founders of kin described the kin ecosystem as designed specifically to bring people together in a new shared economy with the cryptocurrency itself acting as a foundation for a decentralized ecosystem of digital services while most companies that launch their own cryptocurrency don t necessarily have a ready made user base kik had a key advantage with millions of active users through its messaging platform as such the platform helped drive consumer adoption of the kin cryptocurrency the kik app housed many of the traditional third party services and features for the currency including the kin wallet although kin was officially launched late in 2017 it comes on the heels of a large experimental campaign by kik over a period of nearly three years kik ran a project called kik points this was very similar to kin in that it offered kik users the chance to earn and spend points within the app itself perhaps even more notable about the launch of kin was its kin rewards engine through this engine kik launched kin as a daily reward distributed among stakeholders by an algorithm based on the community s contribution to the ecosystem ted livingston kik ceo and founder suggested that the kin token was an opportunity to distribute value amongst developers the idea is that kik will give away value incentivizing developers to build an open and decentralized ecosystem of apps on the kik platform the kin foundation focused on the governance of kin and building an ecosystem of services the ecosystem was not to be based around advertising as many social media platforms are but rather on users being able to provide value to themselves and be rewarded for that contribution besides being a digital currency the kin website described the token as different from other digital currencies because it was a cryptocurrency kin was similar to bitcoin in that it made use of a public blockchain and had monetary value future of kinin 2019 kik announced it would shut down its messaging service to focus on kin however shortly after the announcement the company was purchased by medialab the messaging service remained intact but this came shortly after the securities and exchange commission sec sued kik for raising money in its kin ico without registering it in 2020 the sec ruled that kik violated federal securities law by selling kin in 2017 and was ordered to pay a 5 million fine however the messaging service was not required to shut down the kin network nor required to register kin with the sec thus sales of kin can still take place as the tokens can still be found on exchanges kin has a market value measure in thousands of cents and development has ceased but it maintains a user base that continues trading on a few decentralized exchanges | |
is kin a good crypto | kin was the token for the social app kik it was eventually abandoned in 2023 although it is still available on a few decentralized exchanges | |
is kin worth anything | kin s market value on jan 24 2024 was 0 00001372 and had a market cap of 40 28 million | |
what is kin in crypto | kin was a cryptocurrency designed as an incentive for using the social media app kik and its services the project shut its doors in 2023 the bottom linekin was created by the developers of the social media application kik it was among the first of many cryptocurrency projects that incentivized using services provided by a company after several years the company shut down kik to focus on the cryptocurrency but the project failed to take off eventually shutting its doors in 2023 the comments opinions and analyses expressed on investopedia are for informational purposes only read our warranty and liability disclaimer for more info as of the date this article was written the author does not own cryptocurrency | |
what is a kiosk | a kiosk refers to a small temporary stand alone booth used in high traffic areas for marketing purposes a kiosk is usually manned by one or two individuals who help attract attention to the booth to get new customers retail kiosks are frequently located in shopping malls or on busy city streets with significant foot traffic and provide owners with a low cost alternative to market their products or services understanding kioskskiosks are generally small booths set up in high traffic areas you may see them in the walkways of shopping centers they may be manned by individuals who sell a product or service anything from toys and hair care products to insurance or credit cards kiosks are not always supervised by humans some in fact are electronic providing consumers with a self service style experience these kiosks normally complement an existing service already offered by the kiosk owner for example some provincial government agencies in canada allow the general public to perform certain tasks like renewing car registration or updating personal information for health cards and driver s licenses using electronic kiosks that act much like automated teller machines atms this allows the consumer to execute these tasks on their own without having to wait in line at a provincial ministry because of their small temporary natures kiosks can be low cost marketing strategies malls and other lessors may charge a smaller amount of rent to kiosk owners who might not need or afford a larger retail space kiosks can be a great way for new emerging entrepreneurs to give their businesses a kick start without sacrificing cost that s because they give companies a human face and provide customers with the opportunity to ask questions about their products electronic kiosks give consumers a hassle free convenient experience history of kioskskiosks in the form of simple stalls or booths have been around for hundreds of years in one form or another the first vending machines date back to the 1880s which is when the idea of self service was first brought to the public these vending machines sold simple items such as gum and postcards 1atms first came into use in the 1960s and set the template for how kiosks are known today these types of machines took a while to catch on as individuals still preferred conducting financial transactions in person in 1970 ibm partnered with american airlines and american express to create the first airline ticket self service kiosk in 1977 the first complete self service interactive kiosk was established at the university of illinois providing campus information to students and visitors 1in 1985 florsheim shoe co established the first network of kiosks it consisted of 600 kiosks where shoppers could search for shoes in other locations pay for them and have them directly shipped to their homes 1types of kioskskiosks vary based on the nature of the business and whether the owner intends to make it electronic or man it with individuals the location generally has a relation to the nature of the kiosk as well a local newspaper might set up a kiosk at a grocery store to sign up new subscribers similarly credit card companies often set up kiosks in airports to seek new customers for a credit card that offers frequent flyer miles in addition to kiosks that sell retail products or services some companies set up employment kiosks where job seekers can apply for work this type of kiosk is especially common in chain stores such as walmart employment kiosks provide a way to quickly identify promising candidates who will often receive an interview on the spot the kiosk may include a computer station at which the applicant can use a keyboard or touchscreen to input their employment history education and personal data some employment kiosks also administer assessment tests to help determine an applicant s strengths and weaknesses information collected at the kiosk is frequently available to the hiring manager almost immediately to try to streamline the process of taking food orders some restaurants install self service kiosks customers can follow interactive prompts to select their meal and customize their order the kiosks usually accept credit or debit cards eliminating the need for a human cashier when restaurants use kiosks the need for counter personnel is reduced lowering payroll costs for the company the healthcare industry is also starting to implement kiosks as a method for accepting bill payments checking in patients for appointments and patient record keeping at some kiosks patients can even take their own blood pressure or perform other noninvasive tests and then relay the results to their doctors in some cases medical kiosks also offer educational videos about medical conditions and their treatments patient kiosks can reduce medical costs by cutting down on paperwork and eliminating some clerical staff positions critics of medical kiosks are primarily concerned with patient confidentiality in their arguments against their use a bitcoin kiosk also known as a bitcoin atm is a kiosk connected to the internet that allows individuals to purchase bitcoins and other cryptocurrencies with cash they have deposited the kiosk permits users to create a blockchain based transaction that will send a cryptocurrency to the user s digital wallet the bitcoin kiosks are not actually atms in that they do not allow for the withdrawal or deposit of cash but rather function as a means to connect to the internet to purchase cryptocurrencies although not as common as they once were photo kiosks were popular in shopping centers in the 1980s and 1990s for a small fee people could pose in front of a camera lens that would take three to four photographs customers waited for a few moments while the booth developed and ejected the photos automatic photo kiosks also serve another purpose allowing people to develop and print their own photographs from dvds portable hard drives and memory sticks advantages and disadvantages of kiosksthe primary advantage of a kiosk is that it improves the customer s shopping experience kiosks are easily accessible and the individuals working there are usually pleasant and ready to help both of which make it simpler to provide the customer with detailed information on your product or service another advantage is that because of their small size and ease of being built kiosks can be strategically placed in a location that will receive a lot of foot traffic thereby increasing your customer base the more visible and accessible your business is the likelier you will experience growth kiosks can also reduce your business costs the use of interactive kiosks removes the need for staff thereby cutting down on employee wages and salaries kiosks also don t require the same costs of renting retail space in a shopping center or storefront thereby reducing rental costs the costs saved on labor and rent can be used in other aspects of growing your business such as sales and marketing kiosks also work as a branding tool and can help generate interest in your product uniquely designed kiosks especially interactive ones may attract new customers through sheer curiosity a kiosk that provides a unique experience may generate goodwill with a consumer and raise awareness of your brand and product kiosks may keep away customers who prefer to deal with actual people rather than machines this is particularly true for self service kiosks which sometimes may be difficult to operate for those who are not tech savvy and may increase their frustration larger built out kiosks may be difficult to move if the need arises as they are established in one place this would require increased costs of taking it down and moving it or the need to build a new kiosk in another location kiosks that do not have actual staff working there may be subject to an increase in crime such as shoplifting and vandalism this would require incorporating security measures whether that be security alarms cameras or guards kiosks will always require maintenance those that break down or have technical issues without an employee on hand to fix them or assist the shopper could hurt business and leave customers with a bad user experience hurting your brand improves customer shopping experiencecan increase customer basecan reduce business costshelps improve brandingcan deter customers who prefer interacting with humanslarge hardware heavy kiosks can be expensive and difficult to movesubject to shoplifting and vandalismkiosks with technical difficulties can hurt a brand | |
how much does it cost to rent a kiosk at the mall | the cost depends on the location of the mall the season of the year and the product being sold the cost is at least 800 per month but can reach the thousands some malls also ask for a percentage of sales 2 | |
what is a global entry kiosk at the airport | global entry is a program by the u s customs and border protection cbp agency that allows for expedited clearance for pre approved travelers when they enter the united states there are self service global entry kiosks at international airports in the u s that allow for entry after a quick approval | |
what can you do at a u s postal service usps self service kiosk | usps self service kiosks allow for the purchase of stamps the weighing of packages the printing of priority shipping labels and the shipping of items | |
what is kiosk mode | kiosk mode is a mode that is offered by different web browsers this allows the browser to be viewed in full screen without any other interface such as a toolbar or menu the purpose is to run the content on the entire screen and prevent the user from using the screen or kiosk for any other purpose the bottom linekiosks are small temporary booths placed in areas with high foot traffic that are used by businesses to reach their customers in a more simple and informal manner kiosks are primarily used for marketing purposes and can be staffed by individuals or self service they are typically low cost and help brands raise awareness of their products and services as well as allowing for an interactive way for consumers to engage with the company | |
what is kiting | kiting is the fraudulent use of a financial instrument to obtain additional credit that is not authorized kiting encompasses two main types of fraud check kiting involving bankscarried out within the banking system kiting typically involves passing a series of checks at two or more banking institutions using accounts that have insufficient funds relying on the float time required for a check deposited at one bank to clear at another the kiter typically writes a check at the first bank against an account at the other before that check clears they then withdraw the funds from the second bank account and deposit the funds back into the first the process may then be repeated in the opposite order sometimes repeatedly the net result is a series of fraudulent withdrawals that rely on being a step ahead of the fraudulent check on which they are based having cleared reduced times for checks to clear has helped reduce the incidence of check kiting involving banks as have such practices as banks placing holds on deposited funds and charging for returned checks retail kitinga variant of check kiting is known as retail kiting this relies on cashing a bad check number one at a retailer to purchase an item then before that check has cleared the kiter writes another check number two which may include or entirely comprise a cashback payment while cashback is now most often associated with debit cards some retailers still offer this convenience with checks the cash from check number two is then deposited into the account to allow check number one to clear the fraud is then repeated in order to cover check number two and may be sustained in order to stay ahead of the float and fraudulently obtain a series of items and cash withdrawals kiting with securitieskiting that involves misrepresenting securities generally occurs when securities firms flout sec regulations regarding the timely delivery of buy and sell transactions which must be completed within a three day settlement period 1 if a firm fails to receive the securities within that timeframe it is required to purchase the shortage on the open market and charge the delinquent firm for any associated fees the delinquent firm is considered to be practicing the fraudulent act of kiting if it fails to purchase the securities on the open market and maintains a short position delays delivery or takes part in transactions contrary to the proper settlement of trades 2 | |
what is kiwi bond | the term kiwi bond refers to a type of fixed income security offered and backed by the government of new zealand kiwi bonds provide investors with a fixed rate of interest for a set period of time anywhere from six months to four years and may be purchased for as little as nz 1 000 up a maximum of nz 500 000 these securities are only available to residents of new zealand | |
how kiwi bonds work | it may seem like an exotic and whimsical name for an investment security but it actually makes sense that they re called kiwi bonds when you consider the history and culture of the region where they originate new zealanders are often referred to as kiwis which is viewed as a term of endearment a kiwi is a bird that is native to the region the country s national rugby league team is also called the kiwis kiwi bonds are the main investment option available to individual investors living in new zealand as noted above they are fully backed and secured by the country s government which means they provide a higher degree of security for investors than bank issued and corporate bonds that s because there is little to no chance that the government will default on its obligations the downside though is that kiwi bonds offer much lower interest rates than other bonds kiwi bonds are denominated in new zealand dollars nzd and mature in six months one year two years and four years bonds may be redeemed upon maturity or whenever the bondholder chooses to do so the government of new zealand requires a minimum investment of nz 1 000 with a maximum investment of nz 500 000 for any single issue interest is paid at a fixed rate quarterly in arrears interest rates for kiwi bonds are set periodically by the new zealand debt management office based on moving averages of domestic wholesale rates as of february 2021 six month and one year bonds offered a return of 0 25 while two year and four year bonds offered a 0 50 return application forms and investment statements are available from the new zealand debt management office registry interested investors may also get information on these bonds as domestic registered banks investment firms brokerage companies chartered accountants cas solicitors and investment advisors special considerationsthe new zealand government limits who is eligible to purchase kiwi bonds in fact they are only available to residents of new zealand this means foreign investors are not able to purchase these bonds similarly citizens of new zealand who live abroad are also ineligible to invest in them since kiwi bonds are only open to new zealand residents citizens who live abroad are excluded from purchasing them advantages and disadvantages of kiwi bondsfinancial experts and advisors frequently tout the advantages of investing in kiwi bonds they often paint them as a sort of sleeper hit since they seemed to quietly fly under the radar of many investors but they are known for offering attractive potential rewards to those investors savvy enough to appreciate their benefits while markets and national financial systems in other parts of the world grappled with an assortment of natural and economic disasters causing unpredictable fluctuations in investing activities new zealand s economy remained stable and steady quietly enjoying positive growth and few disruptions their relatively low level of risk combined with the fact that new zealand has a central bank that has earned the trust of the global financial community created the perfect scenario for those seeking an appealing investment option at least for those investors observant enough to be paying attention new zealand was ahead of the curve in dealing with the 2020 crisis that has ravaged the global economy which should further bolster confidence in that nation s debt instruments going forward although they provide a guaranteed investment return as well as security there is a downside to investing in these bonds as mentioned above they do provide a very low rate of return ror this means investors who want to make a decent profit off their investments in a short period of time and those who can tolerate a greater degree of risk likely won t want to put their money in these bonds other bonds such as those offered by banks and large corporations will likely be a better fit for these kinds of investors | |
what is the klinger oscillator | the klinger oscillator was developed by stephen klinger to determine the long term trend of money flow while remaining sensitive enough to detect short term fluctuations the indicator compares the volume flowing through securities with the security s price movements and then converts the result into an oscillator the klinger oscillator shows the difference between two moving averages which are based on more than price traders watch for divergence on the indicator to signal potential price reversals like other oscillators a signal line can be added to provide additional trade signals traders will use tools such as trendlines moving averages and other indicators to confirm trade signals in addition traders may use the oscillator in conjunction with chart patterns such as price channels or triangles as a way to confirm a breakout or breakdown crossovers occur frequently as do divergences so the indicator is best used in conjunction with these other technical trading methods formula for the klinger oscillator k o 3 4 period e m a of v f 5 5 period ema of v f where ko klinger oscillator vf volume force volume force v 2 d m c m 1 t 1 0 0 v volume t trend trend 1 if h l c h 1 l 1 c v 1 trend 1 if above is or h high l low c close d m h l c m c m 1 d m if trend trend 1 begin aligned ko 34 text period ema text of vf 55 text period ema of vf textbf where text ko text klinger oscillator text vf text volume force text volume force v times 2 times dm cm 1 times t times 100 v text volume t text trend text trend 1 text if h l c h 1 l 1 cv 1 text trend 1 text if above is text or h text high l text low c text close dm h l cm cm 1 dm text if trend text trend 1 cm dm 1 dm text if trend text trend 1 end aligned ko 34 period ema of vf 55 period ema of vfwhere ko klinger oscillatorvf volume forcevolume force v 2 dm cm 1 t 100v volumet trendtrend 1 if h l c h 1 l 1 cv 1 trend 1 if above is or h highl lowc closedm h lcm cm 1 dm if trend trend 1 calculating the klinger oscillator e m a c a e b where c current period s vf a 2 x 1 where x is the moving average e prior period s e m a begin aligned ema c times a e times b textbf where c text current period s vf begin aligned a 2 x 1 text where x text is the moving average text period 34 or 55 end aligned e text prior period s ema b 1 a end aligned ema c a e b where c current period s vfa 2 x 1 where x is the moving average e prior period s ema interpretations for price directionthe klinger oscillator is fairly complex to calculate but it s based on the idea of force volume which accounts for volume trend positive or negative and temp based on multiple inputs and if then statements using this data the oscillator is created by looking at the difference between two exponential moving averages of force volume involving different time frames typically 34 and 55 the idea is to show how the volume flowing through the securities is impacting its long term and short term price direction a signal line 13 period moving average is used to trigger buy or sell signals this technique is very similar to signals that are created with other indicators such as the moving average convergence divergence macd while these are the basic signals generated by these indicators it s important to note that these techniques may generate a lot of trading signals that may not be as effective in sideways markets | |
when an asset is in an overall uptrend such as when it is above its 100 period moving average and the klinger is above zero or moving above zero traders could buy when the klinger oscillator moves above the signal line from below | klinger noted that when a stock was in an uptrend and then dropped to unusually low levels below zero and then moved above its signal line this was a favorable long position to take | |
when an asset is in an overall downtrend traders could sell or short sell when the klinger oscillator moves below the signal line from above klinger noted this was especially noteworthy when the indicator had seen an uncharacteristic spike above zero | the zero line is also used by some traders to mark the transition from an uptrend to downtrend or vice versa while such signals won t always agree with price movements a move above zero helps confirm a rising price while a drop below zero helps confirm a falling price the klinger oscillator also uses divergence to identify when the indicator s inputs are not confirming the direction of the price move it s a bullish sign when the value of the indicator is heading upward while the price of the security continues to fall it is a bearish signal when the price is rising but the indicator is falling divergence can be coupled with signal line crossovers to generate trades for example if a bearish divergence forms a sell or short sell could be initiated the next time the klinger crosses below the signal line klinger oscillator vs on balance volumethe klinger oscillator uses price and volume to create two emas the indicator then shows the difference between these two emas a signal line is then added to provide additional trade signals on balance volume is simpler in that it is a running total of positive or negative volume positive volume is added to the running total if the current close is above the prior close or volume is subtracted from the running total if the current close is below the prior close klinger oscillator limitationscrossovers and divergence the two main functions of the oscillator are prone to providing many false signals signal line crossovers are so frequent that it is hard to filter out which ones are worth trading and which ones aren t zero line crossovers also have issues as the indicator may criss cross the zero line multiple times before moving in a sustained direction or the indicator may fail to move with the price resulting in a missed trading opportunity divergence can be useful but often occurs too early resulting in the trader missing a large chunk of the trend or the divergence fails to result in a price reversal at all also divergence is not present at all price reversals so it is not a reliable tool for spotting all possible price reversals use the klinger oscillator only in conjunction with other technical indicators or price action analysis | |
what is the comorian franc kmf | the term comorian franc kmf refers to the official national currency of comoros a sovereign african island nation located in the indian ocean it is maintained and issued by the country s central bank la banque centrale des comores 1 it is represented by the symbol kmf on global currency exchanges 2 the comorian franc was pegged to the euro as of 1999 at a rate of 491 96775 comorian francs to one euro 3 as of january 2022 1 u s is equal to roughly 437 kmf 4understanding the comorian franc kmf the franc is the official national currency of the island archipelago of comoros the country s central bank is responsible for maintaining its value and is in charge of its circulation the bank called la banque centrale des comores was established in 1981 six years after the country gained its independence 6 the central bank is located in the capital of moroni banknotes are printed in various denominations ranging from the 500 1000 2000 5000 and 10 000 franc notes 7 the country also uses coins which are minted in 1 2 5 10 25 50 100 franc denominations 3 a single franc is divided into 100 centimes although no centimes have ever been issued or used 7the kmf is pegged to the euro this relationship was established when the european union adopted the euro in 1999 the exchange rate was fixed and remains as such at 491 96775 francs to one euro 3 prior to this the comorian franc was pegged to the french franc at a rate of 50 kmf to 1 french franc currency rankings show that the kmf is most often exchanged with the united states dollar usd 2although the comorian franc is pegged to the euro it is most often exchanged with the u s dollar 2cash is predominantly used in the island nation larger establishments such as hotels may take credit cards 8 transactions are executed in the local currency although there are some merchants who accept both the u s dollar and the euro along with the comoros franc change however is given in the kmf 9special considerationscomoros has one of the poorest and smallest economies in the world the island s workforce has a low level of education and there are not enough natural resources available either for residents or to use as exports 10the primary industries of the nation fishing and tourism are vulnerable to the region s extreme weather conditions and sporadic volcanic activity as a result despite a relatively low rate of unemployment of 8 4 in 2020 approximately 42 of its 864 335 citizens live below the poverty line the population of comoros is largely young approximately 37 of residents are 14 years old or younger 10agriculture is crucial to the local economy of comoros as is the income generated by its three major exports vanilla cloves and a perfume essence known as ylang ylang despite the archipelago s arable land fertile soil and large fishing industry the country still imports around 70 of its food 11 for 2020 comoros saw real gdp growth of 3 1 with inflation at 0 9 1213comoros was initially part of a french colony which included madagascar when the island of mayotte was purchased in 1841 but the first europeans to discover the archipelago were portuguese in the year 1505 14 as a french colony the money used was the french franc 15in 1920 comorian currency was first printed on an emergency basis on a series of madagascar postage stamps that had been altered to become legal tender and circulate as money in exchange the comorian franc was first formally issued in the 1960s and has appeared in both coin and bill form in various denominations 16 coins dedicated specifically to comoros were issued in the early 1960s and arabic printing has been stamped on them since 1975 the union of comoros is made of three islands anjouan moheli and grande comore a fourth island mayotte was part of the archipelago union until 1975 when the comoros union declared its independence from france however france did not recognize the independence of mayotte and the island remains under french administration to this day 17 | |
what is a knock in option | a knock in option is a latent option contract that begins to function as a normal option knocks in only once a certain price level is reached before expiration knock ins are a type of barrier option that are classified as either a down and in or an up and in a barrier option is a type of contract in which the payoff depends on the underlying security s price and whether it hits a certain price within a specified period understanding knock in optionsknock in options are one of the two main types of barrier options with the other type being knock out options a knock in option is a type of contract that is not an option until a certain price is met so if the price is never reached it is as if the contract never existed however if the underlying asset reaches a specified barrier the knock in option comes into existence the difference between a knock in and knock out option is that a knock in option comes into existence only when the underlying security reaches a barrier while a knock out option ceases to exist when the underlying security reaches a barrier barrier options typically have cheaper premiums than traditional vanilla options primarily because the barrier increases the chances of the option expiring worthless a trader may choose the cheaper relative to a comparable vanilla barrier option if they feel it is quite likely the underlying will hit the barrier down and in knock in optionassume an investor purchases a down and in put option with a barrier price of 90 and a strike price of 100 the underlying security is trading at 110 and the option expires in three months if the price of the underlying security reaches 90 the option comes into existence and becomes a vanilla option with a strike price of 100 thereafter the holder of the option has the right to sell the underlying asset at the strike price of 100 even though it is trading below 90 it is this right that gives the option value the put option remains active until the expiration date even if the underlying security rebounds back above 90 however if the underlying asset does not fall below the barrier price during the life of the contract the down and in option expires worthless just because the barrier is reached does not assure a profit on the trade since the underlying would need to stay below 100 after triggering the barrier in order for the option to have value up and in knock in optioncontrary to a down and in option an up and in option comes into existence only if the underlying reaches a barrier price that is above the current underlying s price for example assume a trader purchases a one month up and in call option on an underlying asset when it is trading at 40 per share the up and in call option contract has a strike price of 50 and a barrier of 55 if the underlying asset does not reach 55 during the life of the option contract it expires worthless however if the underlying asset rises to 55 or above the call option would come into existence and the trader would be in the money | |
what is a knock out option | a knock out option is an option with a built in mechanism to expire worthless if a specified price level in the underlying asset is reached a knock out option sets a cap on the level an option can reach in the holder s favor as knock out options limit the profit potential for the option buyer they can be purchased for a smaller premium than an equivalent option without a knock out stipulation a knock out can be compared with a knock in option understanding a knock out optiona knock out option is a type of barrier option barrier options are typically classified as either knock out or knock in a knock out option ceases to exist if the underlying asset reaches a predetermined barrier during its life a knock in option is effectively the opposite of the knock out here the option is activated only if the underlying asset reaches a predetermined barrier price knock out options are considered to be exotic options and they are primarily used in commodity and currency markets by large institutions they also may be traded in the over the counter otc market types of knock out optionsknock out options come in two basic types a down and out option is one variety it gives the holder the right but not the obligation to purchase or sell an underlying asset at a predetermined strike price if the underlying asset s price does not go below a specified barrier during the option s life should the underlying asset s price fall below the barrier at any point in the option s life the option expires worthless for example assume an investor purchases a down and out call option on a stock that is trading at 60 with a strike price of 55 and a barrier of 50 if the stock trades below 50 at any time before the call option expires then the down and out call option promptly ceases to exist contrary to a down and out barrier option an up and out barrier option gives the holder the right to buy or sell an underlying asset at a specified strike price if the asset has not exceeded a specified barrier during the option s life an up and out option is only knocked out if the price of the underlying asset moves above the barrier assume an investor purchases an up and out put option on a stock trading at 40 with a strike price of 30 and a barrier of 45 over the life of the option the stock hits a high of 46 but then drops to 20 per share too bad the option still would automatically expire because the barrier of 45 had been breached now if the stock hadn t gone above 45 and eventually sold off to 20 then the option would remain in place and have value to the holder advantages and disadvantages of knock out optionsa knock out option may be used for several different reasons as mentioned the premiums on these options are typically cheaper than a non knock out counterpart a trader may also feel that the odds of the underlying asset hitting the barrier price are remote and conclude that the cheaper option is worth the risk of unlikely being knocked out of the trade finally these types of options may also be beneficial to institutions that are only interested in hedging up or down to very specific prices or have very narrow tolerances for risk | |
have lower premiums | limit lossesgood for specific hedge risk management strategiesvulnerable in volatile marketslimit profitsexotic options often less accessible to investorsknock out options limit losses however as is often the case buffers on the downside also limit profits on the upside moreover the knock out feature is triggered even if the designated level is breached only briefly that can prove dangerous in volatile markets example of a knock out optionlet s say an investor is interested in company abc with a share price of 17 as of march 20 by may 2 it closed at 22 92 per share say our investor is bullish on the company but still cautious the investor may write a call option at 23 per share with a strike price of 33 and a knock out level of 43 this option only allows the option holder buyer to profit as the underlying stock moves up to 43 at which point the option expires worthless thus limiting the loss potential for the option writer seller | |
what is a knock out vs a knock in option | a knock out option expires worthless if a certain price of an asset is reached a knock in option is the opposite it is an option that becomes a regular option once a set price is achieved if this price is not reached it is almost as if the option never existed as it does not come into play | |
what is an example of a knock in option | an example of a knock in option would be buying one to purchase a company s share for a strike price of 40 with a knock in price of 50 if the price of the stock does not hit 50 then no option exists if the price hits 50 then the option is activated which creates a regular option with a 40 strike price can anyone trade options yes anyone can trade options you do not have to work for a financial institution or other company to do this all you need is to open your own brokerage account however it is not that simple because options are more complex than trading regular stocks and bonds your broker will need to approve you to trade options based on multiple factors such as your trading experience your financial profile and your investment goals if you d like to trade options start by speaking to your brokerage to find out what is involved the bottom linebecause knock out options limit the profit potential of the investor they can be bought at a discount when compared to regular options if the buyer is fairly certain that the price cap of the asset that would cause the option to expire worthless won t be reached a knock out option is a good choice to take in a bit of extra profit as a result of not having to pay as much in premiums | |
what is the know sure thing kst | the know sure thing kst is a momentum oscillator developed by martin pring to make rate of change readings easier for traders to interpret calculating the know sure thing kst the kst is calculated by taking the simple moving average sma of four different rate of change roc periods adding them together to come up with the kst and creating a signal line by taking the 9 period sma of the kst the kst is calculated with the following equation kst rcma 1 1 rcma 2 2 kst rcma 3 3 rcma 4 4 where rcma 1 10 period sma of 10 period roc rcma 2 10 period sma of 15 period roc rcma 3 10 period sma of 20 period roc rcma 4 15 period sma of 30 period roc begin aligned text kst text rcma 1 times 1 text rcma 2 times 2 phantom text kst text rcma 3 times 3 text rcma 4 times 4 textbf where text rcma 1 text 10 period sma of 10 period roc text rcma 2 text 10 period sma of 15 period roc text rcma 3 text 10 period sma of 20 period roc text rcma 4 text 15 period sma of 30 period roc end aligned kst rcma 1 1 rcma 2 2 kst rcma 3 3 rcma 4 4 where rcma 1 10 period sma of 10 period rocrcma 2 10 period sma of 15 period rocrcma 3 10 period sma of 20 period rocrcma 4 15 period sma of 30 period roc finally the signal line is calculated by taking the 9 period sma of the kst value understanding the know sure thing kst the kst indicator can be used in the same manner as many other momentum oscillators such as the well known relative strength index rsi trading signals are generated when the kst crosses over the signal line but traders may also look for convergence and divergence with the price overbought or oversold conditions or crossovers of the center line many traders combine the kst indicator with other forms of technical analysis to maximize their odds of success for example traders may look at other non momentum indicators chart patterns or candlestick patterns to help in their decision making in a 1992 stocks and commodities article pring referred to the indicator as summed rate of change kst but the kst term stuck with technical analysts 1example of the know sure thing kst let s take a look at an example chart in the example above the kst indicator reached highly overbought conditions in early february and eventually experienced a crossover which generated a well timed sell signal the indicator also crossed over in late february mid march and mid april with limited success but the key is looking for both overbought or oversold conditions as well as a crossover to signal the trade traders may have also looked at other forms of technical analysis to maximize their odds of a successful trade for example traders looking at the above chart may have considered the significant bearish volume on the day that the signal occurred or the candlestick patterns leading up to the trading signal when making their decision these insights could also be used to avoid making less profitable trades suggested by the kst indicator | |
what is know your client kyc | know your client kyc is a standard in the investment industry that ensures advisors can verify a client s identity and know their client s investment knowledge and financial profile three components of kyc include the customer identification program cip imposed under the usa patriot act in 2001 customer due diligence cdd and ongoing monitoring or enhanced due diligence edd of a customer s account once it is established understanding know your client kyc the know your client kyc rule is an ethical requirement for those in the securities industry dealing with customers during the opening and ongoing maintenance of accounts it is implemented at the onset of the customer broker relationship to establish the essential personal profile of each customer before any financial recommendations are made the customer is also made aware of the need to comply with all the laws regulations and rules of the securities industry kyc requirementscip requires that financial firms obtain four pieces of identifying information about a client including name date of birth address and identification number cdd is a process in which all of a customer s credentials are collected to verify their identity and evaluate their risk profile for suspicious account activity edd is used for customers that are at a higher risk of infiltration terrorism financing or money laundering and additional information collection is often necessary kyc compliancetwo rules governing kyc include financial industry regulatory authority finra rule 2090 know your customer and finra rule 2111 suitability finra rule 2090 requires every broker dealer to use reasonable diligence when opening and maintaining client accounts and to know and keep records on the profile of each customer as well as identify each person who has the authority to act on the customer s behalf finra rule 2111 notes that a broker dealer must have a reasonable basis to believe that a recommendation is suitable for a customer based on the client s financial situation and needs this rule assumes that the broker dealer has completed a review of the current facts and profile of the customer including the customer s other securities and investments before making any purchase sale or exchange of a security on the client s behalf aml and kycthe u s financial crimes enforcement network fincen requires both customers and financial institutions to comply with kyc standards to prevent illegal activity specifically money laundering aml anti money laundering is a term for the range of measures and processes used to achieve regulatory compliance kyc is a component of aml fincen requires financial institutions to understand the type and purpose of the customer relationship and develop a customer risk profile used as a baseline for detecting suspicious customer activities financial institutions must also maintain current and accurate customer information and continue to monitor accounts for suspicious and illegal activities when detected they are required to promptly report their findings kyc and cryptocurrencythe cryptocurrency market is praised for providing a decentralized medium of exchange that promotes confidentiality however these benefits also present challenges in preventing money laundering criminals see cryptocurrency as a vehicle to launder money and as a result governing bodies are looking for ways to impose kyc on cryptocurrency markets most cryptocurrency platforms are considered money services businesses msbs and must comply with anti money laundering aml laws which require customer identification programs and certain reporting and recordkeeping procedures fiat to crypto exchanges facilitate transactions involving fiat currencies and cryptocurrencies since fiat currency is the official currency of a nation most of these exchanges employ a measure of kyc and financial institutions would have vetted their customers according to kyc requirements the penalty assessed against bitcoin mixer larry dean harmon for violating anti money laundering laws in dec 2020 fincen proposed that cryptocurrency and digital asset market participants submit maintain and verify customers identities this rule classifies certain cryptocurrencies as monetary instruments subjecting them to kyc requirements the proposed rule is slated for final action in feb 2024 | |
what is kyc verification | the know your client kyc verification is a set of standards and requirements used in the investment and financial services industries to ensure brokers have sufficient information about their clients their risk profiles and their financial position | |
what is kyc in the banking sector | kyc in the banking sector requires bankers and advisors to identify their customers beneficial owners of businesses and the nature and purpose of customer relationships banks must also review customer accounts for suspicious and illegal activity and maintain and ensure the accuracy of the customer accounts |
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