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how the one percent rule works | this simple calculation multiplies the purchase price of the property plus any necessary repairs by 1 the result is a base level of monthly rent it s also compared to the potential monthly mortgage payment to give the owner a better understanding of the property s monthly cash flow this rule is only used for quick estimation because it doesn t take into account other costs associated with a piece of property such as upkeep insurance and taxes example of the one percent rulean investor is looking to obtain a mortgage loan on a rental property with a total payoff value of 200 000 using the one percent rule the owner would calculate a 2 000 monthly rent payment 200 000 multiplied by 1 in this case the investor would seek a mortgage loan with monthly payments of less than and absolutely no more than 2 000 the one percent rule vs other types of calculationsthe one percent rule also helps give an investor a base point from which to consider other factors regarding the ownership of a property a second important calculation is the gross rent multiplier which uses the monthly rent level to determine the amount of time it will take to pay off the investment this calculation is achieved by dividing the total borrowed value by the monthly rent in the example of the home with a value of 200 000 the investor would divide 200 000 by 2 000 this gives the investor a 100 month payoff period which translates to a little over 8 3 years investors can also use the gross rent multiplier when considering the payment schedule terms of a loan taken for the property the 70 rule implies that an investor should not pay more than 70 of the property s estimated value after repairs fewer costs special considerationsin calculating the gross rent multiplier a buyer must also consider the rental rates in the area in which the property is located if the standard rate for rent in the neighborhood is less than 2 000 for the buyer in this example the investor might have to consider decreasing the rent to ensure that they find a tenant another important factor to consider is maintenance on the property the property owner is responsible for upkeep and repairs while a deposit might cover substantial damages it s also important for the owner to budget a specified amount of the rent for savings toward maintenance this can contribute to profits if it s unused and the money would be available when any maintenance needs arise overall investing in real estate can be lucrative for long term investors the base rent that an owner charges on any type of property sets the level of payments expected by tenants owners typically raise rent annually to manage inflation and other costs associated with the property but the base rate is an important level that determines the overall return on an investment | |
what is a one stop shop | a one stop shop is a business that offers a multitude of products or services to its customers all under one roof a one stop shop can refer to a single physical location where the business can be carried out or it can refer to a company that handles a variety of goods or services one stop shops tend to be more convenient for customers as they don t have to go to multiple businesses to meet their needs big box retailers department stores and e commerce sites are often considered one stop shops understanding a one stop shopas noted above the term one stop shop refers to a business that offers different goods and services usually in one location this can be under one roof in a physical store or through a single website like amazon amzn the concept of the one stop shop expanded over time to include business services the nuance also shifted from a wide product offering to capture more of the customer s grocery purchase to offering all the complementary products and services to a client in a particular area for example the 1980s saw the rise of financial supermarkets brokerages like merrill lynch began expanding into retail banking insurance products credit cards and even real estate services 1the business strategy behind the modernized concept of a one stop shop is to provide convenient and efficient service that will create the opportunity for the company to sell more to customers this way a company can grow revenue by selling more to existing customers in addition to growth from new customers the terms full service as in full service broker and turnkey operation are sometimes synonymously with one stop shop history of one stop shopsthe term one stop shop may have first used been in conjunction with businesses that did all the work for that new staple of american life the car from sales to repairs to parts one such firm was the western auto supply the concept dates back to early 20th century america when a shopping trip meant going all over town to pick up meat from the butchers vegetables from the haymarket and bread from the bakery and that was just for groceries hardware supplies cleaning supplies and other household items required visits to even more places then as now people wanted to save time so stores responded by stocking a wider range of products so consumers only had to come to their location to check off the majority of their shopping lists companies took note and began changing the way they did business for instance advantages and disadvantages of a one stop shopthere are some obvious advantages to a one stop shop for consumers as well as the businesses operating them convenience is a big one if the firm that does your taxes can also help you with your estate planning and investing strategy it saves you from having to deal with multiple companies from the firm s perspective seeing all those aspects of your life also allows it to better tailor services in all areas to you if the firm sees that your tax bill is going up they can suggest strategies to minimize the taxes coming from your investments a high level of trust grows over time when a consumer uses a particular business more and builds a personal connection with it there may be loyalty perks for the consumer and the business gains a higher degree of confidence that the customer won t fly to another provider based on price alone expanding the offerings of products and services can provide a steady revenue stream for businesses this is especially true when times are tough since offering a variety of goods and services at different price points ensures that consumers are still shopping the downside of the one stop shop is embodied in the saying jack of all master of none while various services and abilities offered at a single institution are probably competent they may not be as expert or as inventive as those offered by professionals specializing in different fields of tax law or investing a client s options and choices may be limited not only to certain employees but also to its proprietary products and services dealing with a one stop shop may save money thanks to the firm s economies of scale but then again it may not the convenience of the one stop usually comes with a cost from the shop s point of view there are natural limitations on how many products and services one company can offer to a customer while maintaining superior quality some companies expand their suite of services too broadly eroding the core services that made them outstanding to that customer in the first place conveniencebusinesses can tailor services to consumers needsbuilds loyaltysteady revenue stream and foot trafficconvenience at a costconsumer choice may be limited to what a one stop shop offerstoo many offerings may erode quality of core servicesexamples of one stop shopswe ve noted several historical examples of one stop shops above including piggly wiggly and j c penney but there are others in different industries and markets for instance many banks offer their customers a range of services including basic banking lending investment advice and services and insurance policies major financial institutions like bank of america bac ally and wells fargo wfc are common examples of financial institutions that are one stop shops these firms can increase their business and their profits while saving their customers a lot of time and effort many healthcare facilities also operate as one stop shops a healthcare center that provides patients with routine and emergency care lab and imaging services and a pharmacy is also considered a one stop shop | |
what are some examples of one stop shops | there are many examples of one stop shops grocery stores are considered one stop shops for foodstuffs as they offer meat produce fresh and frozen options and prepared foods financial institutions that offer retail and commercial banking lending investment and insurance are also considered one stop shops other examples include big box stores like costco and walmart as they offer a variety of goods and services | |
is amazon a one stop shop | amazon is often considered to be a one stop shop because it offers a variety of goods and services to consumers for instance the e commerce site sells household goods clothing and footwear streaming services music groceries pharmaceuticals and electronic devices the company expanded its offerings since it was established in 1995 amazon began as an online bookstore 5who benefits from one stop shops one stop shops benefit consumers and businesses consumers are given a convenient experience because they only have to visit one location to meet their needs for instance they can shop for groceries household items clothing and other items from a big box store businesses benefit because they can attract more consumers and generate a steady revenue stream from a wide customer base the bottom lineone stop shops have changed the way we shop for our goods and services before grocery stores big box stores financial supermarkets and e commerce sites consumers had to visit multiple businesses to meet their needs but now that companies have expanded their offerings consumers can save time and money by visiting a single location in order to build a loyal customer base though businesses should remember not to sacrifice quality for profits | |
what is a one stop shop | a one stop shop is a business that offers a multitude of products or services to its customers all under one roof a one stop shop can refer to a single physical location where the business can be carried out or it can refer to a company that handles a variety of goods or services one stop shops tend to be more convenient for customers as they don t have to go to multiple businesses to meet their needs big box retailers department stores and e commerce sites are often considered one stop shops understanding a one stop shopas noted above the term one stop shop refers to a business that offers different goods and services usually in one location this can be under one roof in a physical store or through a single website like amazon amzn the concept of the one stop shop expanded over time to include business services the nuance also shifted from a wide product offering to capture more of the customer s grocery purchase to offering all the complementary products and services to a client in a particular area for example the 1980s saw the rise of financial supermarkets brokerages like merrill lynch began expanding into retail banking insurance products credit cards and even real estate services 1the business strategy behind the modernized concept of a one stop shop is to provide convenient and efficient service that will create the opportunity for the company to sell more to customers this way a company can grow revenue by selling more to existing customers in addition to growth from new customers the terms full service as in full service broker and turnkey operation are sometimes synonymously with one stop shop history of one stop shopsthe term one stop shop may have first used been in conjunction with businesses that did all the work for that new staple of american life the car from sales to repairs to parts one such firm was the western auto supply the concept dates back to early 20th century america when a shopping trip meant going all over town to pick up meat from the butchers vegetables from the haymarket and bread from the bakery and that was just for groceries hardware supplies cleaning supplies and other household items required visits to even more places then as now people wanted to save time so stores responded by stocking a wider range of products so consumers only had to come to their location to check off the majority of their shopping lists companies took note and began changing the way they did business for instance advantages and disadvantages of a one stop shopthere are some obvious advantages to a one stop shop for consumers as well as the businesses operating them convenience is a big one if the firm that does your taxes can also help you with your estate planning and investing strategy it saves you from having to deal with multiple companies from the firm s perspective seeing all those aspects of your life also allows it to better tailor services in all areas to you if the firm sees that your tax bill is going up they can suggest strategies to minimize the taxes coming from your investments a high level of trust grows over time when a consumer uses a particular business more and builds a personal connection with it there may be loyalty perks for the consumer and the business gains a higher degree of confidence that the customer won t fly to another provider based on price alone expanding the offerings of products and services can provide a steady revenue stream for businesses this is especially true when times are tough since offering a variety of goods and services at different price points ensures that consumers are still shopping the downside of the one stop shop is embodied in the saying jack of all master of none while various services and abilities offered at a single institution are probably competent they may not be as expert or as inventive as those offered by professionals specializing in different fields of tax law or investing a client s options and choices may be limited not only to certain employees but also to its proprietary products and services dealing with a one stop shop may save money thanks to the firm s economies of scale but then again it may not the convenience of the one stop usually comes with a cost from the shop s point of view there are natural limitations on how many products and services one company can offer to a customer while maintaining superior quality some companies expand their suite of services too broadly eroding the core services that made them outstanding to that customer in the first place conveniencebusinesses can tailor services to consumers needsbuilds loyaltysteady revenue stream and foot trafficconvenience at a costconsumer choice may be limited to what a one stop shop offerstoo many offerings may erode quality of core servicesexamples of one stop shopswe ve noted several historical examples of one stop shops above including piggly wiggly and j c penney but there are others in different industries and markets for instance many banks offer their customers a range of services including basic banking lending investment advice and services and insurance policies major financial institutions like bank of america bac ally and wells fargo wfc are common examples of financial institutions that are one stop shops these firms can increase their business and their profits while saving their customers a lot of time and effort many healthcare facilities also operate as one stop shops a healthcare center that provides patients with routine and emergency care lab and imaging services and a pharmacy is also considered a one stop shop | |
what are some examples of one stop shops | there are many examples of one stop shops grocery stores are considered one stop shops for foodstuffs as they offer meat produce fresh and frozen options and prepared foods financial institutions that offer retail and commercial banking lending investment and insurance are also considered one stop shops other examples include big box stores like costco and walmart as they offer a variety of goods and services | |
is amazon a one stop shop | amazon is often considered to be a one stop shop because it offers a variety of goods and services to consumers for instance the e commerce site sells household goods clothing and footwear streaming services music groceries pharmaceuticals and electronic devices the company expanded its offerings since it was established in 1995 amazon began as an online bookstore 5who benefits from one stop shops one stop shops benefit consumers and businesses consumers are given a convenient experience because they only have to visit one location to meet their needs for instance they can shop for groceries household items clothing and other items from a big box store businesses benefit because they can attract more consumers and generate a steady revenue stream from a wide customer base the bottom lineone stop shops have changed the way we shop for our goods and services before grocery stores big box stores financial supermarkets and e commerce sites consumers had to visit multiple businesses to meet their needs but now that companies have expanded their offerings consumers can save time and money by visiting a single location in order to build a loyal customer base though businesses should remember not to sacrifice quality for profits | |
what is the one third rule | the one third rule estimates change in labor productivity based on changes in capital devoted to labor the rule is used to determine the impact that changes in technology or capital have on production understanding the one third rulelabor productivity is an economic term that describes the cost of a worker s hourly production based on the amount of gross domestic product gdp spent to produce that hour of work in particular the rule asserts that for an increase of 1 in capital expenditures to labor a resulting productivity increase of 0 33 will happen the one third rule further assumes that all other variables remain static so no changes in technology or in human capital occur human capital is the knowledge and experience a worker has using the one third rule an economy or business may estimate how much technology or labor contributes to overall productivity as an example say a company experiences a 6 increase in capital for an hour of labor for a given period in other words it costs more to employ workers at the same time the company s stock of physical capital also increased by 6 using the equation increase in productivity 1 3 increase in physical capital labor hours increase in technology one could infer that 4 of the increase in productivity was due to advancements in technology | |
when a nation has a shortage of human capital it must either focus on increasing human capital through immigration and offering incentives to raise birth rates or on increasing capital investments and developing new technological advancements | factors that affect labor productivitylabor productivity can be hard to quantify accurately while it s simple enough to draw a connection between the number of goods produced by factory labor in one hour of work for example it s harder to place a value on service how much is an hour of a waitress s time worth what about an hour of an accountant what about a nurse statisticians can estimate the dollar value of labor in these professions but without tangible goods to appraise an exact valuation is impossible an increase in a country s labor productivity will in turn create growth in the real gdp per person since productivity indicates the number of goods an average worker can produce in one hour of labor it may give clues to a country s standard of living for example during the industrial revolution in europe and the united states rapid industrial technological advances allowed workers to make great gains in their hourly productivity rates this increased production led to higher standards of living in europe and the united states in general this happens because when laborers can produce more goods and services their wages increase too | |
what is a one time charge | a one time charge in corporate accounting is a charge against a company s earnings that the company s managers expect to be an isolated event and is unlikely to occur again a one time charge can either be a cash charge against earnings such as the cost of paying severance expenses to laid off former employees or a non cash charge such as the writing down of the value of assets such as a piece of real estate whose market value has fallen due to changes in business fundamentals or consumer preferences financial analysts routinely exclude one time charges when they evaluate a company s ongoing earnings potential understanding one time chargessome one time charges do indeed only take place once in such a case they should not recur and would not impact the long run performance and growth of a company as a result they may be excluded from pro forma financial statements or labeled as an extraordinary item however some companies incorrectly record charges that they repeatedly incur in the course of their usual business activities as one time charges this practice may make the company s financial health look better than it really is and it is a practice that investors should be aware of many consider this practice to be a dangerous trend some companies even use restructuring charges as a device to improve future earnings and profitability by taking large restructuring charges firms reduce depreciation in future periods and thus increase earnings this is accentuated when profitability is measured on a return basis since the book value of capital and equity is also reduced by large restructuring charges thus many analysts regard one time charges with skepticism and the adjustments should reflect what they see if the one time charges are really operating expenses they should be treated as such and earnings estimated after these charges if one time charges are actually one time charges earnings should be estimated prior to these charges | |
when it comes to computing return on equity and capital however a more reliable estimate may be obtained if the book value of equity and capital are estimated prior to extraordinary charges not just in the current period but cumulatively over time | the charges that are the most problematic for a company in the context of its stock prices are those related to restructuring for discontinued operations one time charge examplefor example acme technology company may properly write off costs related to restructuring its file server business as a one time charge however if the company also writes down inventory costs every other quarter and reports these charges as one time charges it is less than clear that these inventory write down charges are truly one time charges and acme s financial circumstances may be somewhat different than investors and analysts are being led to believe by the company special considerationswhile financial analysts may disregard one time charges when making their judgments on a company s earnings stock prices are not so forgiving in fact stock returns have demonstrated a tendency to significantly suffer during periods of frequent one time charges thus it s important for anyone researching a given stock which has been subjected to one time charges to understand the nature of each one time charge they are not all equal in the eyes of the investor or analyst some charges represent good economic decisions made by the company others may reflect that the company s finances catching up with past negative events | |
what is a one time item | a one time item is a gain loss or expense on the income statement that is nonrecurring in nature and therefore not considered part of a company s ongoing business operations to get an accurate gauge of a company s operating performance one time items are usually excluded by analysts and investors while evaluating a company although many one time items hurt earnings or profit there are one time items that add to earnings in the reporting period understanding one time itemsone time items are either recorded under operating expenses or below earnings before interest and taxes ebit ebit is essentially a company s profit without the cost of interest on debt and taxes factored into it net income on the other hand is the company s profit after factoring in all costs expenses and revenues and is listed at the bottom of the income statement a one time item such as the sale of an asset could inflate net income for that period one time items are also called unusual items or nonrecurring items types of one time itemsone time items listed on a company s financial statements may include explaining one time itemsa company could list a one time item separately on its income statement particularly if it s self explanatory however many publicly traded companies that report their financial performance on a quarterly and annual basis publish consolidated financial statements these consolidated statements contain the aggregate financial performance for a corporation that owns multiple companies subsidiaries divisions or businesses the aggregated figures make it easier for the company to report their revenue expenses and profit however it s up to investors and analysts to investigate what s behind those aggregated figures as a result the one items might not be listed separately on a consolidated income statement instead the company might group several items into a consolidated line item such as other income if the one time items were gains a separate consolidated line for nonrecurring charges could also be listed however there is usually a footnote number next to these line items on the income statement which refers to a more in depth explanation of the gains or losses in the footnotes section the footnotes are found in the management discussion and analysis md a section of the company s quarterly or annual financial reports benefits of one time itemsreporting one time items separately is important to ensure the transparency of financial reporting one time items help investors and analysts separate any charges or gains that are not part of the core operating revenue for the company one time items are the gains and losses that management does not expect to reoccur so segregating these items explicitly on the income statement or in the md a section allows for a better assessment of the continuing income generating capacity of the business listing one time nonrecurring items helps investors analysts and creditors with the analysis of a company s financial performance banks that lend to corporations would want to know how much of the company s revenue is being generated from its core business operations credit covenants issued by banks are frequently used to ensure that companies meet certain thresholds and financial requirements one time items can skew a company s earnings and revenue positively or negatively bankers must separate these nonrecurring items to properly calculate whether the company is meeting its covenants for example if a company sells cars and has a large one time gain for selling equipment analysts and creditors would need to strip out that one time gain and recalculate the company s net income or ebit although management will flag certain one time items whether an analyst or investor believes they are truly one time or not is a different matter for example companies in the oil and gas industry frequently sell assets to generate cash when oil prices are low these one time gains would increase earnings but if the company continuously sells assets or investments to raise cash they re essentially part of how the company does business of course investors must draw their own conclusions as to whether a company that has frequent one time items such as gains from the sale of assets is being managed properly or perhaps is in financial trouble real world example of a one time itemgeneral electric corporation ge owns several companies and subsidiaries and is involved in various industries including aviation healthcare and renewable energy 1 below is a portion of the income statement from ge s 10 q quarterly financial report for q1 2020 2 ge has restructured the company in recent years and in doing so has sold off some of its businesses a separate line item showing an income adjustment for the quarter is highlighted in blue on the income statement below the entry for other income on the income statement is explained in the notes section near the end of the quarterly financial report note 23 is listed below 4 nonrecurring or one time items may be listed as a separate line item however as shown above with ge one time items can be grouped into other line items since one time items can skew a company s financial performance it s important that investors dig through the footnotes section of a company s financial statements and investigate what s behind those one time items | |
what is a one touch option | a one touch option pays a premium to the holder of the option if the spot rate reaches the strike price at any time prior to option expiration understanding one touch optionone touch option allows investors to choose the target price time to expiration and the premium to be received when the target price is reached compared to vanilla calls and puts one touch options allow investors to profit from a simplified yes or no market forecast only two outcomes are possible with a one touch option if an investor holds the contract all the way through expiration like regular call and put options most one touch option trades can be closed before expiration for a profit or a loss depending on how close the underlying market or asset is to the target price one touch options are useful for traders who believe that the price of an underlying market or asset will meet or breach a certain price level in the future but who are not certain that that price level is sustainable because a one touch option has only a yes or no outcome by expiration it is generally less expensive than other exotic binary options like double one touch or barrier options derivatives like one touch options are not frequently traded by small investors there are some trading venues where they are available but regulators in europe and the u s have often warned investors that they may be overpriced in many cases it is not possible to take advantage of that mispricing by becoming an option writer or seller binary or exotic derivatives are usually traded by institutions that can negotiate with one another for better pricing outcome 1 price approaches target pricea trader believes the s p 500 will rise by 5 at some point over the next 90 days but is not as certain about how long the index will remain at or above that price the trader pays 45 per contract to buy one touch options that pay 100 per contract if the s p 500 meets or exceeds that target price at any point over the next 90 days assume that two weeks later the s p 500 has risen 2 which has increased the value of the position because it is more likely that the index will reach that target price the trader could choose to sell their one touch option contracts for a profit or continue to hold the trade through expiration outcome 2 price remains flat or moves away from target priceassume that a trader believed the s p 500 would rise 5 over the next 90 days and opened a one touch option trade to profit from that forecast the trader paid 45 for one touch option contracts that will pay 100 per contract if the target price is reached instead of rising the index drops 3 on unexpected news a week later which makes it less likely that the target price would be reached before the options expire this trader may then decide to either sell the options and close the trade at a lower price for a loss or hold it in the hopes that the market recovers | |
what is onecoin | onecoin was a cryptocurrency based ponzi scheme the companies behind the scheme were onecoin ltd and onelife network ltd founded by bulgarian national ruja ignatova who disappeared in 2017 however not before the scheme raised 4 billion 12 | |
what is an onerous contract | an onerous contract is an accounting term that refers to a contract that will cost a company more to fulfill than what the company will receive in return the term is used in many countries worldwide where international regulators have determined that such contracts must be accounted for on balance sheets the united states has a different system based on generally accepted accounting principles or gaap as set forth by the u s based financial accounting standards board understanding onerous contractsthe international accounting standards ias defines an onerous contract as a contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it 1 the term unavoidable costs also has a specific meaning for accounting purposes the ias defines it as the lower of the cost of fulfilling the contract and any compensation or penalties arising from failure to fulfill it 1 onerous contract examplean example of an onerous contract might be an agreement to rent a property that is no longer needed or that can no longer be made use of profitably for instance suppose a company signs a multiyear agreement to rent office space then moves or downsizes while the agreement is still in effect leaving the office space which it now has no use for vacant or consider a mining company that has signed a lease to mine for coal or some other commodity on a piece of land but at some point during the term of the contract the price of that commodity falls to a level that makes extracting it and bringing it to market unprofitable special considerationsthe rules for how onerous contracts should be treated in a company s financial statements are part of the international financial reporting standards ifrs for which the ias board is the independent standard setting body the governing body the ifrs foundation is a not for profit organization based in london 2 international accounting standard 37 ias 37 provisions contingent liabilities and contingent assets classifies onerous contracts as provisions meaning liabilities or debts that will accrue at an uncertain time or in an unknown amount provisions are measured using the best estimate of the expenses required to satisfy the current obligation 3 under ias 37 any business or company that identifies a contract as onerous is required to recognize the current obligation as a liability and to list that liability on its balance sheet this process is meant to be undertaken at the first indication that the company expects a loss from the contract 1 the ifrs and iasb standards are used by companies in many countries throughout the world although not in the united states the u s requires companies to follow another set of standards under gaap under gaap losses obligations and debts on committed onerous contracts typically are not recognized or dealt with however the fasb has been working with the iasb to establish compatible standards worldwide | |
what is online banking | online banking allows you to conduct financial transactions through the internet online banking offers customers almost every service traditionally available through a local branch including deposits transfers and online bill payments virtually every banking institution has some form of online banking you can access through a computer or app online banking is also known as internet banking or web banking | |
how online banking works | online banking is a popular way of doing business with a bank with online banking you aren t required to visit a bank branch to complete most of your basic banking transactions you can do all of this at your convenience wherever you want at home at work or on the go online banking can be done using a browser or app mobile banking is online banking that is done on a phone or tablet here are some of common ways you can use online banking with online banking you don t need to visit a physical bank branch but you can do it wherever you want at home work or on the go in addition you can typically do online banking 24 7 however customer support might not be available at all hours you can do online banking through a financial institution s web portal using a web browser such as chrome or safari through a mobile app this allows you to access services from many locations 1you can usually deposit a check through a mobile app using a process known as remote deposit capture enter the check amount then use the app to take a photo of the front and back of the check to complete the deposit many banks and credit unions offer tools to help you review and balance your budget built into apps or websites you may also be able to track spending trends or track savings toward a goal online banking transactions vary from one financial institution to another most banks generally provide essential services such as electronic transfers and bill payments some banks even let you set up new checking or cd accounts or apply for credit cards through web portals other online functions include ordering checks stopping payments on checks or reporting a change of address online banking may provide fewer services than traditional banking does for instance you can t exchange foreign currency you may be unable to complete a credit application online such as a mortgage application instead some banking business must be carried out at a bank or credit union branch online banksonline banks operate exclusively online meaning they don t operate branches where you can conduct business in person the best online banks offer low cost or free banking plus above average interest rates on savings accounts certificates of deposit cds and money market accounts these banks handle customer service by phone email or online chat rather than in person prominent online banks in the u s include ally bank discover bank and synchrony bank online only banks might not provide direct automatic teller machine atm access but usually enable customers to use atms at other banks and retail stores they might even reimburse some or all of the atm fees other financial institutions charge the savings gained by not maintaining physical branches typically allows online banks to deliver significant savings on banking fees while you can deposit or take out a certain amount of cash at an atm or store most online banks impose a dollar limit as of october 2023 just 6 of u s adults with bank accounts reported their primary bank was an online only bank 2pros and cons of online bankingconvenientfast and efficienteasy to monitor accountscustomer service challengestech and connectivity requiredhacking risk | |
what do you need for online banking | to take advantage of online banking you ll need an internet connection and an electronic device like a computer or mobile phone after setting up your account you ll keep handy a debit or other bank card and access to your account numbers setting up your online banking account can also be reasonably straightforward but you ll need a few things to set up an online checking account or savings account just like a brick and mortar bank account the bank will spell out exactly what you need on its website but it typically requires | |
how can you safely use online banking | to shield your money and your personal information from cyber crooks you should take these safety precautions 1frequently asked questions faqs can you use online banking to pay bills you can use online banking to pay bills by logging into your online banking account to arrange bill payments electronically or by check online bill pay is a simple way to take care of your bills and help ensure you re always on time with payment by setting up automatic payments it works especially well for bills with regular set amounts such as a mortgage payment insurance premium or car payment | |
what is the best online bank | the best online bank for you will depend on your banking service needs and priorities investopedia s choice for the best online bank overall is ally bank our top choice for savings is synchrony bank and our top choice for checking is discover the bottom lineonline banking is a fast inexpensive and convenient way to handle many of your everyday financial needs you can probably access online banking if you already do business with a bank or credit union all you need to do is sign up for online banking services and while you can use online banking features from a traditional bank picking an online only bank for your banking needs might boost the interest you earn on savings and help reduce fees | |
what is online shoplifting | online shoplifting is the theft of goods from an internet based merchant online shoplifting might seem harmless since the shoplifter never interacts with the victim and executes the fraud with a few keystrokes and mouse clicks it is a crime nonetheless and online shoplifters can face serious legal problems such as charges of mail fraud | |
how online shoplifting works | one way to conduct online shoplifting is through the credit card chargeback process a consumer purchases goods online using a credit card receives the goods then submits a statement to the credit card company claiming that they never received the goods as a result the credit card company initiates a chargeback and forces the merchant to refund the customer s purchase even though the customer has never set foot in the merchant s place of business they have effectively shoplifted by fraudulently using the chargeback process to obtain goods without paying for them what is more if a credit card payment processor receives too many chargeback requests for the same company it may stop doing business with them the online merchant then experiences secondary damage from online shoplifting because it can no longer accept a certain brand of credit card this might in turn reduce sales since the inability to accept that card will significantly inconvenience customers to be clear chargebacks themselves are not fraudulent but when consumers abuse this tool meant for consumer protection it raises alarms with both retailers and credit card issuers on top of the lost merchandise the new york times reports it can cost up to 40 on average to process a chargeback request 1types of online shopliftinganother way to conduct online shoplifting is through piracy illegally downloading copyrighted music books or movies for free instead of purchasing them through legitimate channels is a form of online shoplifting that simultaneously robs both producers and distributors the issue has posed a challenge for a number of reasons consumers of pirated content want it for free or at least a very low cost secondly media companies often lack the resources to respond to growing demands for free content the digital media underworld moves faster than big businesses with conglomerates of intelligent hackers and pirates joining forces across the globe thirdly the proliferation of user generated content allows anyone and everyone to create and distribute content without even realizing that they are committing copyright infringement along the way | |
what is online to offline o2o commerce | online to offline o2o commerce is a business strategy that draws potential customers from online channels to make purchases in physical stores online to offline o2o commerce identifies customers in the online space such as through emails and internet advertising and then uses a variety of tools and approaches to entice the customers to leave the online space this type of strategy incorporates techniques used in online marketing with those used in brick and mortar marketing | |
how online to offline o2o commerce works | retailers once fretted that they would not be able to compete with e commerce companies that sold goods online especially in terms of price and selection physical stores required high fixed costs rent and many employees to run the stores and because of limited space they were unable to offer as wide a selection of goods online retailers could offer a vast selection without having to pay for as many employees and only needed access to shipping companies in order to sell their goods some companies that have both an online presence and an offline presence physical stores treat the two different channels as complements rather than competitors the goal of online to offline commerce is to create product and service awareness online allowing potential customers to research different offerings and then visit the local brick and mortar store to make a purchase techniques that o2o commerce companies may employ include in store pick up of items purchased online allowing items purchased online to be returned at a physical store and allowing customers to place orders online while at a physical store special considerationsthe rise of online to offline commerce has not eliminated the advantages that e commerce companies enjoy companies with brick and mortar stores will still have customers that visit physical stores in order to see how an item fits or looks or to compare pricing only to ultimately make the purchase online referred to as showrooming the goal therefore is to attract a certain type of customer who is open to walking or driving to a local store rather than waiting for a package to arrive in the mail online to offline o2o is related to but not the same as the concepts of clicks to bricks or click and mortar models online to offline o2o commerce trendsconsider amazon s 13 7 billion purchase of whole foods in 2017 and you can see where the leader in online commerce is placing some of its bets in physical space 1 amazon will even let you pay with your amazon prime credit card at whole foods and earn 5 rewards the same as if you used your amazon card to pay online 2that s not to say that traditional retailers aren t hedging their bets as well walmart has spent mightily to bridge the gap between online users and retail locations including its 2016 purchase of e commerce company jet com for approximately 3 billion one of walmart s goals for the acquisition was to make inroads in reaching city dwellers and millennial customers demographics that jet had excelled in attracting with their massive user base that added about 400 000 new shoppers each month 3acquiring companies that already have a huge online shopping customer base is just one o2o commerce strategy retailers like walmart are using expanded services like home grocery delivery and curbside pickup are other o2o services that retailers offer target walmart kroger nordstrom and many other retailers all offer contactless curbside pickup this service enables shoppers to buy what they need in a safe and timely manner without having to enter the store or leave their car walmart executives see these types of value added services as key to the company s growth and reported that e commerce sales grew 97 in the u s in the second quarter of 2020 4 | |
what is the ontario securities commission | the ontario securities commission osc is the largest securities regulator in canada enforcing securities laws in the province of ontario as a crown corporation the osc is answerable to the provincial government of ontario understanding the ontario securities commission osc the ontario securities commission osc regulates exchanges alternative trading systems ats and quotation and trade reporting systems qtrs in the province of ontario like virtually all securities regulators the osc works to maintain market integrity and investor confidence by enforcing securities laws specifically the osc enforces the securities act and the commodity futures act both of ontario the osc develops securities rules by consulting with the canadian public advisory committees and international organizations the commission is empowered to take a range of actions to enforce compliance with ontario securities law it can issue a cease trade order order the restatement and refiling of financial statements and add conditions to a registration it can also following an enforcement proceeding impose sanctions and even fines but recovering damages for defrauded investors is not within its purview the ontario securities commission and srosthe osc currently recognizes two self regulatory organizations sro the investment industry regulatory organization of canada iiroc and the mutual fund dealers association mfda the three organizations divide up compliance review duties the osc reviews advisers exempt market dealers scholarship plan dealers and fund managers the iiroc reviews investment dealers and futures commission merchants the mfda reviews mutual fund dealers these regulatory bodies may subject a firm to a compliance review based on complaints as part of a broad sweep or at random limitations of the ontario securities commissionwhile the osc s mandate to foster fair and efficient markets may seem quite broad there are limits on its ability to regulate in legal gray areas for example in 2017 canadian markets were disrupted by illegal short and distort campaigns in which short sellers spread false information to drive down the price of the stock they re shorting when investors demanded the osc take action the commission explained that there is often little it can do without specific evidence of intentionally fraudulent statements that can be difficult to find and in some cases short sellers are rattling markets without relying on false information at all they are simply identifying a company they believe is overvalued and shorting it while actively campaigning for its price to drop while the osc and iiroc have certain tools to put a damper on the short selling of a stock they are typically averse to using them fearing their interference may be more disruptive than the short campaign 1 | |
what is the ontario teachers pension plan board otppb | the ontario teachers pension plan board otppb oversees the retirement plan that was established for the benefit of public school teachers in ontario understanding the ontario teachers pension plan board otppb the ontario teachers pension plan board otppb administers the defined benefit plan shared by teachers at public schools in ontario the most populous province in canada the board was established in 1990 and has since become one of the largest investment funds in canada as of the beginning of 2022 the pension plan held approximately cad 227 7 billion in investments these assets serve the needs of more than 300 000 retirees and employees prior to the establishment of otppb teachers pensions were managed wholly by the provincial government under the government s oversight the pension fund invested exclusively in low risk government bonds a significant part of otppb s mandate at its inception was to create a more sophisticated and diversified investment regime at the same time the plan s obligations to current and future retirees require it to maintain a conservative approach to risk like any pension fund otppb s fundamental goal is to manage funding risk the risk that assets and returns fail to satisfy the plan s obligations to its participants otppb now manages a variety of assets including international equities commodities natural resources and real estate the otppb and the canadian modelotppb was an early pioneer in the development of a pension management style known as the canadian model other pension funds such as the ontario municipal employees retirement system omers have followed suit and canadian plans have achieved a global reputation as leaders in effective and responsible management the otppb describes the pillars of this system as independence strong internal governance starting with board members direct investment and a focus on retaining talent in practice the first step in this innovation was to bring investment management almost entirely in house this often means that the board will enter into deals directly rather than use a private equity firm as an intermediary managing investments directly allows otppb to keep costs low and to keep to a long term approach that can conflict with the investment strategies of non pension funds otppb has also achieved success by maintaining a board that has avoided political concerns that have often struck other public pension institutions board members have tended to come from backgrounds in finance rather than political or public service large funds in the united states by contrast tend to have boards drawn from a wider range of backgrounds often leading to conflicts in oversight finally otppb s version of the canadian model includes executive pay that is out of scale with its counterparts in the united states otppb executive pay is competitive with bay street the investment community in toronto and is structured to reward long term returns pension managers in the united states for comparison tend to receive compensation far below the norms of wall street | |
what is opaque pricing | opaque pricing is a way that companies can sell their merchandise at hidden lower prices opaque pricing is a type of price discrimination with the target customer being the one who will purchase a product or service primarily based on price price conscious customer and not based on the company s amenities reputation etc | |
how opaque pricing works | the opaque pricing strategy is popular in the travel industry websites like hotwire and priceline use it to sell unsold hotel rooms airline tickets and car rentals customers who wish to take advantage of an opaque pricing structure visit a website which offers hidden rates choose their location dates and for hotels star rating after paying the website will reveal the name of the hotel but doesn t allow for refunds changes or cancellations opaque pricing benefits hotels because they can sell otherwise empty rooms without damaging brand integrity in addition once reserved the hotel has guaranteed revenue for that room as the reservation can t be modified the big benefit of opaque pricing used by hotels is that it allows them to sell otherwise empty rooms without damaging brand integrity benefits of opaque pricingwhile a seller would ideally like to charge the maximum price a buyer is willing to pay the seller doesn t actually know what that maximum is and the buyer has no incentive to tell as anyone who has haggled with a car salesman well knows this is why sellers create segmented offerings as a way to get at least some customers to pay more for example airlines offer first class seats at a dramatically higher price per unit of space consumed the buyer gets more space and the prestige of flying in first class and the airline gets an order of magnitude higher revenue per customer for the same flight often 10x more types of opaque pricingother techniques of opaque pricing include charging a high starting price and then lowering price through age based discounts movie tickets for kids and older citizens channel based discounts online versus offline volume discounts frequent flyer programs and geography based pricing differences enterprise software special considerationsthe market clearing price for products usually still leaves a seller with excess inventory open seats on a flight for example however the marginal cost of that inventory is often so low that it is usually possible to sell it for a profit but doing so means that people who would have bought the product at a higher price will now pay less and aggregate revenue will decrease by selling a hotel room through a bundled vacation package a seller dramatically decreases the likelihood of cannibalizing their own revenue | |
what is an opco | opco is the abbreviation for operating company typically used when describing the primary operating company involved in an opco propco deal which is the most common structure for spinning off a real estate investment trust reit the property company propco maintains ownership of all real estate and related debt while the opco conducts day to day operations and management offering the opco advantages related to its credit rating and financing capabilities | |
how does an opco work | an operating company property company opco propco deal is a business arrangement in which a subsidiary company i e the property company owns all of the revenue generating properties while the main company operating company manages operations without direct property ownership itself opco propco deals allow all financing and credit rating related issues for both companies to remain separate thus improving each entity s financial position in an opco propco deal strategy companies are divided into at least one operating company and one property company while the property company owns all of the assets including real estate or other property that are associated with the generation of revenues the opco is the one that uses the assets to generate sales 1an opco propco strategy makes it possible for companies to keep certain elements namely debt and thus debt service obligations credit ratings and related issues off of the books of the operating company this typically presents the company with considerable financial advantages and savings if the operating company creates a reit for all of its real estate holdings it can avoid double taxation on all of its income distributions when credit markets become more constricted or when property values take a plunge opco propco deal strategies are not as practical and in many instances are not even feasible example of an opcocasino companies which often function in a sense as entertainment or resort reits may consider opco propco restructuring to create shareholder value and to streamline operations the model for this is the 2013 restructuring of penn national gaming inc where the casino company received permission from the u s internal revenue service irs to perform a tax free spinoff of its properties into a new reit 2penn national gaming thus spun off the reit gaming and leisure properties transferring all ownership of real estate assets to the newly formed reit after completing this spinoff gaming and leisure properties then leased the properties back to penn national gaming who operated them 3the special tax rules that exist on penn national gaming s reit prevent the propco from having to pay federal income tax on any rents obtained from the opco penn national gaming s reit also has a significantly lower interest rate than a gaming company in addition because penn national gaming eliminated all of the direct debt related to the property by assigning ownership to its reit the opco s lightened balance sheet permits the casino company to borrow the funds it needs to operate and also to dump into further development and expansion of its casinos reocs and reitsthere are functional and strategic differences between real estate operating companies reocs and reits many reits focus their investment and portfolio strategy to generate cash flow through the rent or leases generated by the properties they hold investments made by a reit in a construction project and acquisitions might be aimed at generating rental income from the property that net income primarily goes toward distributions issued to investors a real estate operating company might fund new construction and then sell the property for a return the company could also buy a property refurbish the building and then resell the real estate for a profit a reoc could likewise serve as a management company that oversees the properties the earnings that a real estate operating company generates can largely be reinvested in projects such as acquisitions refurbishments and new construction this allows a reoc to fill up its portfolio relatively quickly with potential long term prospects this can be contrasted with regulations that require reits to distribute most of their net income to their shareholders as dividends there may be the potential for greater growth prospects with a reoc but they might not generate as much immediate income as reits | |
what is an operating company property company deal opco propco | an operating company property company opco propco deal is a business arrangement in which a subsidiary company i e the property company or propco owns all of the revenue generating properties instead of the main company the operating company or opco opco propco deals allow all financing and credit rating related issues for both companies to remain separate this business structure is common in real estate deals and in the structuring of real estate investment trusts reits understanding operating company property company deals opco propco parent companies can be conglomerates or holding companies a conglomerate such as general electric owns companies with distinct business models in addition to its core operations in contrast a holding company is created with the specific purpose of holding a group of subsidiaries and does not conduct its business operations holding companies normally form to realize tax advantages master limited partnerships or mlps also employ a similar parent subsidiary structure most mlps are publicly traded for tax purposes investors may choose how they would like to receive the income the company generates a mlp has a pass through tax structure meaning that all profits and losses are passed through to the limited partners the mlp itself is not liable for corporate taxes on its revenues and thus avoids the double taxation of most corporations 1 most mlps operate in the energy industry subsidiaries own shares officially units of the parent company mlp redistributing the passive income through the corporation as a regular dividend criticisms of an operating company property company deal opco propco opco propco arrangements allow the operating company to rent or lease property from the property company in practice this looks like a sale and a leaseback however the company never relinquishes the property in any real way as the propco and opco are part of the same group of companies while this might sound like the corporate equivalent of having your cake and eating it there can be several downsides to creating a propco if a business works out of multiple locations rather than a primary one a propco arrangement locks the company into a situation where closing any location becomes more difficult in a traditional business setup for example a company might choose to close an underperforming location or office and likely sell the property by contrast in a propco arrangement the propco owns the property and may not choose to offload it if the market won t return enough to cover the debts as a result the opco may be required to pay rent on a property even if it is not utilizing it because the propco depends on that income to service the debt financed off the properties example of an operating company property company deal opco propco in the u k opco propco deals are a very popular method in which a parent company can create a reit a reit owns operates and or finances real estate that produces income most reits specialize in a specific sector such as office reits or healthcare reits in general reits will pass on collected rent payments to investors in the form of dividends the creation of a reit via an opco propco deal can occur by initially selling income generating assets from the operating company to a subsidiary the subsidiary then leases the property back to the operating company the operating company can subsequently spin off the subsidiary as a reit the advantage of doing this is that the company can then avoid double taxation on its income distributions 2 | |
what is the opec basket | the opec basket is a weighted average of oil prices from the different opec members around the world members of the organization of the petroleum exporting countries opec contribute data that forms the basis of the basket the basket is a benchmark or reference point for those monitoring the oil price and the stability of the global oil market the opec basket is also known as the opec reference basket orb or the opec reference basket of crude understanding the opec basketthe opec basket depends on specific petroleum blends from opec member countries and is a weighted average a weighted average is a mean calculated by giving values to data influenced according to some attribute in the case of the opec basket the defining characteristic is the weight of the crude oil as of december 2020 the opec basket averaged the prices of crude oils from thirteen member states 1 they included saharan blend from algeria girassol from angola djeno from congo zafiro from equatorial guinea and rabi light from gabon iran heavy basra light from iraq kuwait export and es sider from libya were also part of the basket bonny light from nigeria arab light from saudi arabia murban from the united arab emirates and merey from venezuela round out the list some of the opec oils have higher sulfur content than crude oils from other countries hydrocarbons or crude oil that have higher sulfur contents are more expensive to refine because of that the price of the opec basket is generally lower than other oil reference prices crude oil with excessive impurities is unsuitable for many uses unless it is extensively processed many other countries throughout the world also produce oil however they are not opec members russia the united states china and canada are all major oil producers but not opec members opec s member countries produce a substantial fraction of the world s oil oil prices matter a great deal to the global economy because the production and distribution of all consumer goods depend on petroleum oil fuels the trucks that transport goods the tractors that plow agricultural fields the cars that consumers use to get to the market and much more opec provides a way for the member oil producing countries to create stable market conditions for themselves by raising or lowering production the opec basket vs other crude oil benchmarksthere are many different crude oil benchmarks representing more than 200 varieties of crude oil they vary substantially in both price and overall quality some of the leading alternatives to the opec basket include benefits of the opec basketthe main use of the opec basket is setting and achieving opec price targets whenever people hear news stories about opec raising oil prices the price they are hearing about is the opec basket price there is a substantial competition between various crude oils because most of them are relatively close substitutes however the direct goal of opec members is to raise the price that they receive for their own oil in the global market since the opec basket is a weighted average of opec members oil prices it is ideal for setting the organization s goals and measuring its success criticism of the opec basketsince it is just an average the opec basket is not a type of unrefined oil that businesses can buy directly instead they must buy some particular oil such as kuwait export or arab light these crude oils vary in price and quality so the opec basket is not very useful for oil refineries real world example of the opec basketon april 26 2018 the opec basket stood at 71 per barrel this price represents a steady rise over the previous month on march 26 2018 the orb was 66 80 a year before it stood at about 51 47 and rose steadily throughout 2017 | |
what is open | the term open appears in several usages in the financial markets however there are two that hold particular significance depending on the context in which they are used understanding opendepending on the exchange or venue the open may be the first executed trade price for that particular day it is very likely that the open price will not be the same as the previous day s closing price other venues might sample trading for a short period of time near the beginning of the official trading day and create an official open it may or may not be the same as the price of the first trade this may be the method used for securities that have very little trading activity and may just be the previous day s close different exchanges will have different opening times for instance the new york stock exchange nyse and the nasdaq open at 9 30 am est whereas the chicago mercantile exchange cme opens trading in u s treasury securities futures at 8 20 am est 7 20 cst 123the primary reason why an order remains open is that it carries conditions such as price limits or stop levels unlike a market order a limit order to buy entered when the current traded price of the security is already above that limit price will not execute until such time that the market declines to meet it a buy stop order will not turn into a market order until the security reaches a specified price level another reason may simply be the lack of liquidity for that particular security if there are no established bids and offers by market makers or other traders then no trading occurs there is a related use for the term open that is of interest to futures and options traders open interest is the total number of open or outstanding options or futures contracts that exist at a given time unlike the stock market where the number of shares outstanding is fixed by the company itself and does not change very often open interest in the derivatives markets changes constantly this can yield important information to traders and analysts about how aggressively market participants act in rising and falling price trends investopedia does not provide tax investment or financial services and advice the information is presented without consideration of the investment objectives risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors investing involves risk including the possible loss of principal | |
what is open architecture | open architecture is used to describe a financial institution s ability to offer clients both proprietary and external products and services open architecture ensures that a client can satisfy all their financial needs and that the investment firm can act in each client s best interests by recommending the financial products best suited to that client even if they are not proprietary products open architecture helps investment firms avoid the conflict of interest that would exist if the firm only recommended its own products open architecture explainedfinancial advisers who work for financial institutions with an open architecture approach can potentially meet their clients needs better than advisers who work for proprietary institutions advisers receive a fee for their recommendations in an open architecture setting rather than the commission they would earn in a proprietary setting at their best open architecture can improve the client s asset allocation and diversification offer lower fees and provide better returns it also fosters an environment of increased trust between clients and advisers open architecture has become much more common as investors have gotten smarter and demanded more options from financial institutions one result of open architecture is that brokerage firms have had to rely less on earning fees from their own funds and more on earning fees for offering high quality financial advice reasons for open architecturea single brokerage may not offer all the financial products a client needs or that are in a client s best interests in fact the greater the wealth of a client usually will mean a greater need for a wider range of products and services open architecture makes it possible for investors and their advisers to select the best funds available and obtain the best potential investment performance given their needs and risk tolerance open architecture also helps investors obtain better diversification and possibly reduce risk by not placing their entire future investment returns in the hands of a single investment firm and its approach brokerage firms and banks that limit clients choices through a closed architecture approach where investors can only choose that firm s or bank s funds put themselves at risk of client lawsuits over fiduciary negligence questions to ask about open architecturethose considering investing via an open architecture platform should consider the fact that open architecture has no legal definition and no regulation so it can be ripe for abuse for example one downside of open architecture is that some firms increase the costs for investors to purchase outside funds to encourage investment in their own funds a practice called guided architecture for example a company s 401 k plan managed by an investment brokerage might have the lowest fees for that brokerage s own funds while it might allow investors to purchase funds from other brokerages it might impose a 25 commission on each trade discouraging going outside the architecture to invest guided architecture can be hard to spot as fees tend to be well hidden and therefore hard to compare a good rule of thumb is to assume that if a third party is involved in getting an external fund onto a platform there will be at least one more layer of fees investors looking at an open architecture firm should first ask about their capabilities and whether their advice will feed into the planning of a portfolio some firms have investment management and planning in separate areas where they don t interact would be clients should also ask whether a relationship manager can implement given advice if not there will be the inconvenience of having to go elsewhere for implementation an investor should ask who they will be interacting with over time a team that can handle the client s life stages is preferable | |
what is open banking | open banking is also known as open bank data open banking is a banking practice that provides third party financial service providers open access to consumer banking transaction and other financial data from banks and non bank financial institutions through the use of application programming interfaces apis open banking will allow the networking of accounts and data across institutions for use by consumers financial institutions and third party service providers open banking is becoming a major source of innovation that is poised to reshape the banking industry 1understanding open bankingunder open banking banks allow access and control of customers personal and financial data to third party service providers which are typically tech startups and online financial service vendors customers are normally required to grant some kind of consent to let the bank allow such access such as checking a box on a terms of service screen in an online app third party providers apis can then use the customer s shared data and data about the customer s financial counterparties uses might include comparing the customer s accounts and transaction history to a range of financial service options aggregating data across participating financial institutions and customers to create marketing profiles or making new transactions and account changes on the customer s behalf 1the promise of open bankingopen banking is a driving force of innovation in the banking industry by relying on networks instead of centralization open banking can help financial services customers to securely share their financial data with other financial institutions for example open banking apis can facilitate the sometimes onerous process of switching from using one bank s checking account service to another bank s the api can also look at consumers transaction data to identify the best financial products and services for them such as a new savings account that would earn a higher interest rate than the current savings account or a different credit card with a lower interest rate 1through the use of networked accounts open banking could help lenders get a more accurate picture of a consumer s financial situation and risk level in order to offer more profitable loan terms it could also help consumers get a more accurate picture of their own finances before taking on debt an open banking app for customers who want to buy a home could automatically calculate what customers can afford based on all the information in their accounts perhaps providing a more reliable picture than mortgage lending guidelines currently provide another app might help visually impaired customers better understand their finances through voice commands open banking can also help small businesses save time through online accounting and help fraud detection companies better monitor customer accounts and identify problems sooner 3open banking will force large established banks to be more competitive with smaller and newer banks ideally resulting in lower costs better technology and better customer service established banks will have to do things in new ways that they are not currently set up to handle and spend money to adopt new technology however banks can take advantage of this new technology to strengthen customer relationships and customer retention by better helping customers to manage their finances instead of simply facilitating transactions 3before banks offered open banking the closest thing available were aggregation sites like mint or personal capital that combine users account information from all their financial institutions so they can see it in one place such services accomplish this by requiring users to hand over their usernames and passwords for each account then scraping the data off the screens of those accounts this practice has security risks and the results of screen scraping are not always entirely accurate making it difficult at times for users to identify transactions in addition users may find that not all of their financial accounts are compatible with account aggregation services preventing them from getting a true or complete picture of their finances apis are considered a more secure option because they enable applications to share data directly without sharing account credentials 23risks of open bankingopen banking may offer benefits in the form of convenient access to financial data and services to consumers and streamlining some costs for financial institutions however it also potentially poses severe risks to financial privacy and the security of consumers finances as well as resulting liabilities to financial institutions open banking apis are not without security risks such as the potential for a malicious third party app to clean out a customer s account this would be an extreme and less likely threat much broader concerns would simply be data breaches due to poor security hacking or insider threats that have become relatively widespread in the modern era including at financial institutions and will likely remain commonplace as more data becomes interconnected in more ways 2open banking is likely to alter the competitive landscape of the financial services industry which could benefit consumers by increasing competition as described above but could also have the reverse effect and increase consumer costs if it leads to consolidation in financial services due to the natural economies of scale from big data and network effects resulting market concentration and associate pricing power could more than offset any cost advantages to consumers such market consolidation has already been seen and widely criticized in other internet based services such as online shopping search engines and social media in that it is widely believed by consumers and regulators to result in misuse of customers data by tech giants for their own benefit beyond the direct costs of market concentration similar misuse of customers private financial data could ultimately raise even greater concerns 2 | |
what is open cover | open cover is a type of marine insurance policy in which the insurer agrees to provide coverage for all cargo shipped during the policy period open cover insurance is most commonly purchased by companies that make frequent shipments as the blanket coverage keeps them from having to purchase a new policy each time a shipment is made understanding open coveropen cover policies are commonly used in international trade specifically by companies involved in high volume trade over long periods of time there are many risks associated with marine shipping that would lead to a company wanting to purchase marine insurance some of these risks include damage to cargo from loading or unloading infestation sinking piracy weather issues and other similar difficulties marine insurance is typically split between insurance for the ship known as hull and machinery and the cargo each would be required to have their own insurance policy if a company believes it will not be engaging in marine activity that often it can opt to buy a renewable policy where it can renew the policy after it expires if needed this means that for every voyage it would renew the open cover policy most marine companies opt for a permanent policy for a specific time period if they expect to be making numerous voyages in that time frame the permanent policy covers all voyages under that time period without having to negotiate a contract for each shipment it is a form of blanket coverage that only requires certain details to be notified before embarking on the voyage since the insured is agreeing to purchase a longer term contract it may be able to realize lower premiums because the insurer does not have to spend time on administrative activities and the insurer benefits from having a guaranteed premium over a longer period of time premiums are typically paid upon declaration of a voyage for example weekly or monthly individual countries manage insurance regulations for international shipping rather than an international organization scandinavian countries and the u k are well known marine insurance policy providers and china is also growing as an underwriter country facultative vs open covermarine insurance is typically divided into two types facultative and open cover facultative insurance gives the insurance company the option of covering cargo however the insured and the insurer must negotiate the terms for each shipment including the type of coverage cargo and ship open cover insurance differs in that the insurer is obligated to provide coverage provided that the cargo falls within the boundaries outlined in the insurance policy document and the shipment happens within the policy time period this makes open cover insurance a form of treaty reinsurance requirements for open coverin some respects an open cover insurance policy is considered a contract of utmost good faith meaning that the insured must voluntarily reveal to the insurer all information pertinent to the accepted risks failure to do so could void an open cover policy to aid in this disclosure requirement the insurance company provides certificates to be filled out every time cargo is sent the value of the cargo the proposed travel period and the location are recorded in the certificate the terms of an open cover policy will set a maximum value for the cargo to be covered within a defined time period once the maximum value is reached a new agreement should be signed between both parties since countries govern their waters marine insurance regulations are under the control of the governments where any losses may occur not the insured company s regulations or their governments | |
what is open end credit | open end credit is a loan from a bank or other financial institution that the borrower can draw on repeatedly up to a certain pre approved amount and that has no fixed end date for full repayment open end credit is also referred to as revolving credit credit cards are one common example | |
how open end credit works | open end credit is credit that you can withdraw from and repay repeatedly for an indefinite amount of time types of open end credit include a line of credit or a credit card which are also considered revolving credit 1with open end credit when you repay what you owe the amount of credit you have available increases again here are some examples of open end credit with a credit card for example the card issuer will set a credit limit based on such factors as the card holder s income and credit score if for example the limit is set at 20 000 the cardholder can spend up to that much if they spend 5 000 in a month they would then have 15 000 left to spend on that card 2once the cardholder has paid back the 5 000 their credit limit will be back at 20 000 each month they will also be charged interest on their outstanding balance and have to make at least a minimum monthly payment this cycle can continue for as long as the credit card holder keeps that card lines of credit come in a variety of forms personal lines of credit serve much the same purpose as credit cards in most cases the borrower can take out money whenever they wish up to the pre established limit most personal lines of credit are unsecured meaning that they aren t backed by any collateral from the borrower but based instead on the lender s assessment of the borrower s creditworthiness home equity lines of credit helocs are an example of secured lines of credit the lender will open a line of credit based on the amount of equity that the homeowner has in their home the home serves as collateral like other lines of credit helocs can be useful if the borrower needs access to money but not all at once for example someone might take out a 50 000 heloc to finance a remodeling project that they plan to do and pay for in stages a home equity loan by contrast is an example of a closed end loan the borrower receives a lump sum of money such as the 50 000 in the example above all at once they must then repay it in installments until it is fully paid off by a certain end date closed end loans are sometimes referred to as installment loans with mortgages car loans and student loans being common examples advantages and disadvantages of open end creditlike any type of credit open end credit has both pros and cons to consider a major advantage of open end credit is that the borrower has to pay interest only on the amount they use for example someone with a 50 000 home equity line of credit who has borrowed 10 000 from it so far will only owe interest on that 10 000 not the other 40 000 if on the other hand they had taken out a home equity loan for 50 000 they would start owing interest on the full amount from day one another advantage is that open end credit can be used for just about any purpose credit cards are the most obvious example but this is true for lines of credit as well closed end credit by contrast is issued on the condition that it be used for a specific purpose such as to buy a house or a car flexibility is an advantage but it also has risks as well revolving loans may even encourage overspending that could be a particular danger for someone with multiple credit cards each with its own credit limit in addition credit cards and other forms of open end credit often have variable rather than fixed interest rates that can increase | |
does open end credit help your credit score | open end credit can either help or hurt your credit score depending on how you use it if you have a credit card for example and reliably make at least the minimum required payment each month that can help your credit score however if you max out your card or get too close to its credit limit that will affect your credit utilization ratio which can lower your score | |
what is a credit utilization ratio | your credit utilization ratio is a measure of the amount of debt you have outstanding at any given time compared to the amount of credit you have available to you for example if you have a credit card with a 20 000 credit limit and owe 10 000 on it your credit utilization ratio on that card is 50 | |
what is a good credit utilization ratio | credit scores and prospective lenders typically favor credit utilization ratios of 30 or less and the lower the better 3open end loans are useful in a variety of situations and offer flexibility that closed end loans do not at the same time some borrowers can get into an unmanageable amount of debt with them to stay out of trouble it s a good idea to keep an eye on your credit limit and try not to get too close to it | |
what is an open end fund | an open end fund is a diversified portfolio of pooled investor money that can issue unlimited shares the fund sponsor sells shares directly to investors and redeems them as well these shares are priced daily based on their net asset value nav most mutual and exchange traded funds etfs are open end 1they are also more common than their counterpart closed end funds and are the bulk of the investment options in company sponsored retirement plans such as 401 k plans 2investopedia jessica olah | |
how an open end fund works | an open end fund issues shares if buyers want them it s always open to investment purchasing shares causes the fund to create new replacement shares while selling shares takes them out of circulation shares are bought and sold on demand at their nav the daily basis of the net asset value is on the value of the fund s underlying securities and is calculated at the end of the trading day for mutual funds if a large number of shares are redeemed the fund may sell some of its investments to pay the selling investors 1an open end fund provides investors with an easy low cost way to pool money and buy a diversified portfolio investment goals for open end funds include holding growth income large cap and small cap stocks among many others the funds can target specific industries or countries investors typically do not need a lot of money to gain entry into an open end fund occasionally when a fund s investment management determines that its total assets have become too large for its goals the fund is closed to new investors in rare cases the fund s investors instigate the move to be a closed end fund open end funds are so familiar virtually synonymous with mutual funds that many investors may not realize they are not the only type of fund in town that s because most mutual funds and etfs are open end though pooled investments were historically closed end until the 1970s 3difference from closed end fundsclosed end funds launch through an initial public offering and shares in them on exchanges they price trades at a discount or premium to the nav based on supply and demand throughout the trading day closed end funds cost more at times given wider bid ask spreads for illiquid funds occasional volatility means their price could be higher or lower than its nav would indicate closed end fund shares must be traded through a broker 4pros and cons of open end fundsboth open and closed end funds are run by portfolio managers with the help of analysts both types of funds mitigate security specific risk by holding diversified investments and having lower investment and operating costs because of the pooling of investor funds open end funds must maintain ample cash reserves to meet shareholder redemptions since these funds must be kept in reserve and not invested their yields can be lower all else being equal open end funds typically provide more security while closed end funds offer a bigger return because management must continually adjust holdings to meet investor demand the fees for these funds can be higher than those for other funds investors in open end funds enjoy greater flexibility in buying and selling shares since the sponsoring fund family always makes a market in them hold diversified portfolios lessening riskoffer professional money management | |
are highly liquid | require low investment minimumsmust maintain high cash reservescharge high fees and expenses if actively managed post lower yields than closed end funds real world example of an open end fundfidelity s magellan fund one of the investment company s earliest open end funds aims at capital appreciation it was founded in 1963 and during the late 1970s and 1980s it became legendary for regularly beating the stock market as of the beginning of the second quarter of 2024 it had a lifetime average annual total return of 15 8 5its portfolio manager peter lynch became a household name 6 the fund became so popular with assets hitting 100 billion that in 1997 fidelity closed it to new investors for nearly a decade it reopened in 2008 5can you sell back shares of an open end fund yes generally investors can sell their shares back to the fund at any time based on the present nav | |
are open end funds regulated | yes open end funds are subject to regulatory oversight to protect investors typically by government bodies like the u s security and exchange commission | |
do open end funds pay dividends | yes open end funds may pay dividends from the income generated by their investments which can be reinvested or paid to investors | |
what impact do investor redemptions have on an open end fund | investor redemptions can lead to the fund selling assets to meet withdrawal demands which may affect the fund s composition and performance the bottom lineopen end funds are a popular choice for investors seeking diversification and flexibility they allow for unlimited shares and are priced in relation to the nav the nav is calculated only at the close of trading each day for open end mutual funds while they offer significant advantages such as liquidity and a wide range of investment options potential drawbacks include management fees and the impact of redemptions on the fund s performance | |
what is an open end lease | an open end lease is a type of rental agreement that obliges the lessee the person making periodic lease payments to make a balloon payment at the end of the lease agreement amounting to the difference between the residual and fair market value of the asset open end leases are also called finance leases often open end leases are used in commercial transactions for example when a moving business procures a fleet of vans and trucks an open end lease may prove to be a better bargain due to the unlimited mileage offered under the terms of a lease | |
how an open end lease works | since the lessee must purchase the leased asset upon lease expiration that person bears the risk that the asset depreciates more than was expected by the end of the lease of course at the same time the lessee stands to realize a gain if the asset depreciates less than expected for example suppose your lease payments for a car are based on the assumption that a 20 000 new car will be worth only 10 000 at the end of your lease agreement if the car turns out to be worth only 4 000 you must compensate the lessor the company who leased the car to you for the lost 6 000 since your lease payment was calculated on the basis of the car having a salvage value of 10 000 basically since you are buying the car you must bear the loss of that extra depreciation conversely if the car is worth more than 10 000 at the end of the lease you receive a refund from the lessor there are different opinions on whether an open end lease is more appropriate for an enterprise that intends to own the vehicle at the end of the term open end vs closed end leasesin the case of vehicles procured through an open end lease typically there is no restriction on the mileage that can be accumulated during the terms of the agreement this allows the operator to use the vehicle as they see fit with the understanding that they will purchase the vehicle in the condition they have put it in a closed end lease by some accounts may make more sense for a general consumer who needs a vehicle that will make somewhat regular trips usually to work and home of predictable length meaning the mileage should be consistent and the wear and tear will be regulated an open end lease can make more sense for an enterprise because the company might be able to select the depreciation rate of the asset at the time of the signing allowing for more control of how the costs for the agreement play out furthermore an open end lease can inform the lessee about the financial stability of the company leasing out the asset by gauging rates they make available to their customers | |
what is an open end management company | an open end management company is a type of investment company responsible for the management of open end funds open end management companies manage both open end mutual funds and exchange traded funds etfs | |
how an open end management company works | an open end management company is a type of management investment company as classified by the investment company act of 1940 investment companies are classified into three basic categories all of these investment companies manage assets in investment products generally investment companies must all follow the rules and regulations enacted by the 1940 act as well as the securities act of 1933 and the securities exchange act of 1934 open end management companies are most often associated with the management of open end mutual funds however they also manage etfs too vanguard is one example of an open end management company open end funds are open meaning that they can continually bring on new investors and new investment capital rather than being closed at some point where they no longer bring on new investors or capital all capital is pooled from the various investors shares are issued as long as investors are willing to buy and are bought and sold at their net asset value nav open end funds are an easy way to gain exposure to financial markets in a diversified way with a specific investment objective types of open end management companiesopen end mutual funds are not traded on exchanges therefore the open end management company is responsible for distributing and redeeming all of the shares of open end mutual funds offered in the market open end mutual funds do not have a specific number of shares offered in the market these funds are sold and redeemed at their daily net asset value nav per share investment company rules and regulations require transactions for open end mutual funds to take place at their forward nav this means buyers and sellers can expect to transact at the next nav following their transaction request open end mutual funds pool the money from investors in order to attain operational and management economies of scale open end funds are managed to a broad range of investment objectives they can deploy various types of strategies they also manage assets across a wide range of market sectors and segments open end funds offer numerous share classes for investors they are structured to include retail investor shares and institutional investor shares they also often issue special shares for certain types of investments such as retirement funds while the transactions of open end funds are managed by their respective open end management company and not on any exchange investors may choose to deal with intermediaries fees and open end management company fee structures are applied when seeking to transact an open end fund through an intermediary full service brokers and distributors will charge fees according to the management company s sales load fee structure which is outlined in the fund s prospectus investors transacting through a discount brokerage will pay lower fees and may face certain investment minimums etfs are also offered by open end management companies and as characteristics of such funds do not have a specified number of shares offered in the market therefore the open end management company can issue and redeem shares at its discretion etfs differ from open end funds in that they trade actively throughout the day on an exchange like stocks they do not offer a range of share classes with different fee schedules but rather investors buy etfs through brokers or on brokerage platforms total net assets of u s registered mutual funds worldwide in 2020 1etfs are passively managed funds managers of etfs select a specific benchmark to replicate and purchase the stocks listed in that benchmark for example the s p 500 this allows investors exposure to a large number of shares in the market without having to purchase the individual shares themselves and because etfs are passively managed they typically have low expense ratios open end funds and etfs do have many similarities both are pooled funds allowing for management and operational economies of scale both open end funds and etfs offer products managed to a wide range of investment strategies and objectives | |
how to invest in open end funds | there are a variety of ways to invest in open end funds and the best way to do so is through a broker a broker will sell shares of a specific fund to investors if you are purchasing an exchange traded fund for example you can sign on to your broker s online portal choose the etf you wish to purchase and buy it like you would a stock if an investor is interested in gaining exposure to the s p 500 for example they can purchase state street s spdr s p 500 trust spy or the ishares core s p 500 etf ivv most of the large investment management companies such as vanguard offer over 100 mutual funds with specific investment goals that investors can choose from open end vs closed end fundsthe primary difference between an open end fund and a closed end fund is that open end funds are open to new investors and new investment capital whereas closed end funds are closed to new investors and new capital managers of closed end funds believe the fund has reached a size that is optimal and any size larger would impede the strategy of the firm or have negative consequences to the overall market if the fund was making large buy or sell orders closed end funds offer a fixed number of shares like publicly traded companies and release these shares into the market via an initial public offering ipo shares are listed on an exchange and are available to purchase on the secondary market via brokers shares are bought and sold throughout the day and are purchased or sold at the price they are trading at during the day as opposed to the end of day nav open end funds on the other hand are valued at their nav unless they are etfs and can constantly release new shares if investor appetite exists both types of funds however are professionally managed invest in a variety of equities or asset classes and pool the investment capital of the investors in order to invest on a larger scale | |
what is the main difference between open end and closed end funds | the differences between open end funds and closed end funds are that closed end funds have a limited number of shares available in the market are offered through an ipo and are priced at their market value throughout the day open end funds for the most part are priced once a day at their nav and are constantly open to investors with new shares being offered as long as there is appetite | |
what is an open end index fund | an open end index fund is an open end fund that tracks a specific index an open end index fund selects a benchmark to track such as the s p 500 and purchases the stocks in that index in order to replicate its returns an open end index fund is different from an exchange traded fund etf which also tracks an index in that it has characteristics reflective of an open end fund such as being priced to its nav once a day and only being able to be purchased and sold once a day | |
how do i know if a fund is open ended | you can tell if a fund is open end through the information provided in its prospectus or its website you can also determine if it is open ended in how it is priced which would be its net asset value nav | |
what is an open ended investment company oeic | an open ended investment company oeic is a type of investment fund domiciled in the united kingdom that is structured as a company in its own right to invest in stocks and other securities oeic shares do not trade on the london stock exchange the price of the shares is based largely on the underlying assets of the fund these funds can mix different types of investment strategies such as income and growth small cap and large cap and can constantly adjust their investment criteria and fund size oeics are called open ended because they can create new shares to meet investor demand also the fund will cancel the shares of investors who exit the fund oeics are regulated by the financial conduct authority fca which means services such as the financial ombudsman are available to investors if problems arise 1understanding an open ended investment company oeic an open ended investment company pools investors money and spreads it across a wide range of investments such as equities or fixed interest securities this diversification helps reduce the risk of losing an investor s principal oeic funds offer the potential for growth or income they usually function as a medium to long term investment held for five to ten years or longer any u k investor 18 years or older may invest in a wide range of funds managed by industry experts as in the united states there are various levels of risk available for capital growth income generation or a combination of both shareholders may invest for themselves or their children when children turn 18 years old they hold the investment in their own right charges for oeic sharesas of 2021 investors pay an initial charge of between 0 to 5 when buying new shares this type of front end load lowers the amount of money going into the fund to purchase shares in addition there is an annual management charge amc of around 1 to 1 5 of the value of an investor s shares the amc covers the fund manager s services funds that are not actively managed such as index trackers have much lower fees most funds quote a total expense ratio ter or an ongoing charges figure ocf each charge includes the amc and other expenses used for comparing different products the ter and ocf do not include dealer charges that can add significantly to annual costs if the fund has a high turnover rate there may also be an exit charge for selling shares based on a percentage of the total value of the sale however many oeics do not charge exit fees investing in oeicsoeics are useful for investors who do not have the time interest or expertise to actively manage their investments investors may invest a single payment or monthly payments with minimum amounts depending on the fund also access to funds online or over the phone is generally easy further shareholders may pay a fee when moving between funds offer professional money management | |
are highly liquid | feature low investment minimumscarry high annual fees sales chargesincur taxesmust maintain cash reserves restricting returnsrequire mid to long term investment horizonoeic are not tax advantaged so interest and dividends are taxable and selling shares may incur a capital gains tax of course the amounts involved must exceed dividend and capital gains tax allowances also shareholders may hold oeics tax free in an individual savings account isa or other u k pension plan 23however investment values and resulting income are not guaranteed and may increase or decrease depending on investment performance and currency exchange rates for funds investing in foreign markets therefore a shareholder may not get back the original amount invested u s residents may not hold shares in oeics u s shareholders must have the oeic sell their shares or transfer their investments to u k residents oeics vs unit trustsin the united kingdom unit trusts uts and oeics are the two most common types of investment funds and they also have much in common like oeics unit trusts consist of a manager who buys stocks and bonds for holders of a fund in an open ended format the two mainly differ in the way they are priced unit trusts will have two prices oeics have only one price per day based on the net asset value nav of the underlying assets of the fund oiecs tend to have lower fees than uts because they have a simpler structure many investment companies have been converting unit trusts into oeics for this reason 4real world example of oeicsbritish oeics are comparable to american mutual funds and many u s investment companies that do business in the u k offer them one such is fidelity international an overseas division of fidelity investments in july 2018 the division announced it was instituting variable management fees for five uk domiciled oeics including the fidelity special situations fidelity european fidelity asian dividend fidelity global special situations and fidelity american funds 5the change effectively reduced the base amc of the funds by 10 5correction oct 13 2022 this article previously misstated that shares of oeics trade on the london stock exchange | |
what is an open house | in real estate an open house is a scheduled time when a house or other dwelling is designated to be available for viewing by potential buyers usually the owners or renters vacate the house when the broker holds an open house the term open house can also refer to the real estate property itself in either case it applies to dwellings that are for sale by the owner they are often held to advertise a newly developed community monkeybusinessimages getty images | |
how an open house works | in the real estate market buying and selling a property is an example of a relatively illiquid market with dissimilar products each house will be different from the next even if they are in the same neighborhood or even on the same block during an open house the seller or seller s agent allows potential buyers to enter and walk through the property at their leisure or guided by a realtor the goal of an open house is to secure interest from buyers open houses allow interested buyers to take their time looking at the house and surrounding property rather than a shorter one on one appointment with a broker many open houses occur on weekends and brokers may use banners and other fanfare as advertisements during an open house period owners keep the houses clean and organized to attract potential buyers some owners or agents may also serve coffee cocktails or hors d oeuvres at these events advantages and disadvantages of open housesfor people trying to sell their homes an open house provides an opportunity to attract interested buyers to the property a well executed event can generate excitement about the home and potentially lead to an offer many realtors advise their clients to hold an open house the first weekend after the property goes up for sale even if the event doesn t snag a buyer an open house can still be beneficial as visitors walk through the home they re likely to discuss their perceptions of the property this feedback can alert the realtor to issues that might be preventing the house from selling unattractive paint colors for example can be an easy fix that can boost a home s selling potential for some sellers an open house entails more effort than it is worth during the event the property owner must leave the property to give the realtor free rein this may mean making alternate living arrangements for children and pets owners also need to remove personal items like photographs that might prevent prospective buyers from imagining themselves in the home due to safety and theft concerns some sellers are also hesitant to have groups of strangers walking through their homes according to a 2024 report from the national association of realtors nar just 3 of all buyers visited open houses as the first step in their home buying process this includes 4 of people ages 69 to 77 and just 2 of younger people 25 to 33 years most buyers begin the home buying process by either contacting a real estate agent or browsing online however a large portion 47 will attend an open house mostly between the ages of 59 to 68 1 these statistics go against the common belief that opening a home to the public for a few hours on the weekend will draw foot traffic that will translate into a sale with the advent of the internet many properties are listed online before the first open house is scheduled home seekers can view photos and information about the property s condition on a website allowing homeowners to cast a much wider net for potential buyers for some sellers this can make open houses seem obsolete attracts interested buyersalerts realtor to issues with the house through visitor feedbackmay lead to an immediate offergreat way to show the house to a lot of people at once instead of drawn out one by one showingscan entail more effort in organizing than its worthonline listings can reach more potential buyers in a shorter amount of timeowners may have to leave their homes during open housesmay be a potential for theft especially if the event draws a large crowdbroker s open housein contrast to a traditional open house which is open to the public a broker s open house is strictly for real estate professionals a broker s open house intends to allow real estate agents to view the property it also allows the seller s realtor to solicit professional opinions from their peers about the property and its price in many cases the broker s open house also encourages buyers agents to schedule a showing for their clients a broker s open house usually is held midweek when agents are more available than on weekends when they re occupied with showing homes to their clients a broker s open house is among the tools that real estate agents use to market a home in addition to online marketing systems like multiple listing service mls it s a way to introduce a listing to industry professionals in a community 2sellers should make sure to remove or hide any valuables before an open house event to protect themselves against theft in addition it s also a good idea for your broker to require each visitor to sign in with at least their full name email address and phone number | |
how do you find an open house | you can find open house listings via online real estate marketplaces on social media and by simply calling local realtors and asking them about upcoming open houses in your area can anyone go to an open house open houses are primarily a way for potential buyers to see new homes on the market but anyone can attend an open house including those who aren t in the market for a new home | |
should you go to an open house before making an offer | you don t have to go to an open house before making an offer but it s usually a good idea to view a property in person before making an offer however during the pandemic many realtors ended up selling homes to eager buyers based solely on photographs and information available on online listings 3 | |
what should you serve at an open house | you don t have to serve refreshments at an open house but it might be nice to offer potential buyers coffee tea water and cookies if it is an evening event or a specialized open house you could offer mocktails or cocktails with hors d oeuvres | |
should you stage an open house | over half of buyers agents 58 agree that some form of staging is a good idea when selling a house according to the national association of realtors staging a house is a skill and it involves making a home appealing to a wide pool of buyers fresh paint removing clutter and keeping it extremely clean are easy ways to stage a home when brokers sell a newly built home they often use stagers to set up every room 4 | |
how long do open houses last | the length of an open house event varies depending on the property the broker and the seller it could be as short as one hour or an entire morning or afternoon open houses typically aren t held all day but some brokers may prefer to do so it s not uncommon for a broker to hold several open house events when selling a home the bottom lineopen houses are one way to bring potential buyers into a home there are a few types of open houses traditional ones are available to the public and anyone interested in seeing the house can attend conversely a broker s open house only allows real estate professionals to view the property during a broker s open house buyers agents are encouraged to set up showings for clients open houses require work by the seller and their real estate agent and they may not be worth the effort in some markets interested buyers can view homes first online with photographs and even 360 degree virtual tours of properties before making an in person appointment the advent of this technology has impacted how buyers view and purchase homes and while open houses are still helpful tools for selling a house they won t always be necessary | |
what is open interest | open interest is the total number of outstanding derivative contracts for an asset such as options or futures that have not been settled open interest keeps track of every open position in a particular contract rather than tracking the total volume traded thus open interest can provide a more accurate picture of a contract s liquidity and interest identifying whether money flows into the contract are increasing or decreasing investopedia dennis madambaunderstanding open interestopen interest is most often associated with the futures and options markets where the number of open contracts changes daily open interest is the number of options or futures contracts held by traders in active positions these positions have been opened but have not been closed out expired or exercised open interest decreases when buyers or holders and sellers or writers of contracts close out more positions than were opened that day 1 to close out a position a trader must take an offsetting position or exercise their option open interest increases once again when investors and traders open more new long positions or sellers take on new short positions in an amount greater than the number of contracts that were closed that day here s a simple scenario assume that the open interest of the abc call option is 0 the next day a trader buys 10 abc options contracts as a new position open interest for this particular call option is now 10 the day after five abc contracts were closed and 10 were opened this means that open interest increased by five to 15 a common misconception about open interest lies in its ability to make predictions new traders might be led to believe that it can forecast price action but it cannot high or low open interest only reflects trader interest and sentiments open interest vs trading volumeopen interest is sometimes confused with trading volume but the two terms refer to different measures for example imagine one trader holds 10 option contracts and sells them to a new trader entering the market the transfer of these contracts does not create any change in the open interest because positions were transferred not closed or opened trading volume on the other hand increased by 10 because of the transferral the importance of open interestopen interest is a measure of market activity little or no open interest means there are no opening positions or that nearly all the positions have been closed high open interest means there are many contracts still open which means market participants will be watching that market closely open interest measures money flow into or out of a futures or options market increasing open interest represents new or additional money coming into the market while decreasing open interest indicates money flowing out of the market open interest is significant to options traders as it provides key information regarding the liquidity of an option high open interest creates opportunities to buy and sell this liquidity helps traders move into and out of positions quickly if liquidity is low low open interest traders are less able to get in and out of the market real world example of open interestbelow is a table of trading activity in the options market for traders a b c d and e open interest is calculated following the trading activity for each day the key to understanding how this works is whether the trader bought or sold to open or close positions | |
is higher open interest better | high open interest usually indicates higher liquidity for a contract this generally means there will be less difference between how much a trader wants for an option and how much another will pay this can make it easier to buy and sell if open interest is increasing and becoming higher this signals that the market trends around that option are likely to continue | |
is open interest bearish or bullish | rising open interest usually means that there is new buying happening which is a bullish trend however if open interest grows too high it can sometimes be a bearish signal that indicates a coming change in market trends | |
when open interest increases it usually means new money is coming into the market for that option as long as this is happening the current trend will continue when open interest decreases it is usually a sign that the market is liquidating and more investors are leaving this often means that the current price trend is ending | the bottom lineopen interest is the total number of open derivative contracts that haven t been settled they haven t been exercised closed out or expired this measurement is associated with the options and futures market rather than the stock market open interest is equal to the total number of open contracts not the sum of all transactions between buyers and sellers | |
what is an open listing | an open listing in real estate is a property for sale which may be shown by multiple real estate agents the agents compete to find a buyer for the property the open listing is the opposite of an exclusive listing in which a real estate agent is engaged by the property owner with the understanding that the agent has the sole right to represent the owner and sell the property | |
when the listing is open the agent who makes the sale is paid the commission not the listing agent if the homeowner finds a buyer without the assistance of an agent no one is paid a commission if the agent has an exclusive right to sell the agent earns a commission regardless of who sells the property | understanding an open listingan open listing is also referred to as a listing agreement on a nonexclusive basis agents who directly participate in selling this property including the listing agent and the selling agent are entitled to a share of the commission if it ultimately leads to a sale sellers who are hoping for a quick sale may opt for an open listing if they don t attract a buyer during the term of the agreement they may then change to an open listing to get more prospective buyers through the door the seller may also hope to avoid paying a commission altogether that is if a buyer and a seller make a private deal independently there may be no sales commission if it is an exclusive right to sell agreement the agent is still owed the commission if it is an exclusive agency listing agents are paid only if they sell the property 1special considerationsreal estate agents can be reluctant to take on an open listing or reluctant to put much work into it because the commission is likely to be split the open listing arrangement stands to benefit the seller by offering them access to more agents to sell their property real estate firms may have rules that govern whether their agents may participate in open listing arrangements some firms allow open listings to be accepted but not advertised although the agents are allowed to engage clients they already have as potential buyers the limited potential for commissions incentives agents to focus on exclusive contracts | |
what does exclusive mean on a real estate listing | the word exclusive indicates that the listing for the property is being handled by a single agent no other agent can show the property or negotiate a sale if it is an open listing any agent can show the property and negotiate a deal | |
is an exclusive listing or an open listing better for the seller | the seller who offers a real estate agent an exclusive will be getting a representative who is determined to make a sale and will spend the time and energy necessary to do it an open listing may get the property higher visibility other agents who see the listing can canvass their own networks of buyers for a possible match that said real estate agents balk at accepting open listings an exclusive might be the way to go at least initially if the house fails to sell consider the open option | |
does an open listing have an expiration date | most real estate listings have an expiration date it might be 90 days or 180 days the expiration date is not very relevant in an open listing since the contract does not commit the seller to paying a commission to the real estate agent | |
what is an open loop card | an open loop card is a general purpose charge card that can be used anywhere that brand of card is accepted it usually bears the logo of the card brand or network which processes the actual transactions such as visa mastercard american express or discover in the case of cards offered through financial institutions like visas or mastercards it often shows the name of the issuing bank or credit union as well open loop cards can be credit cards debit cards gift cards or prepaid cards the partnerships involved with the issuance of open loop cards can be structured in various ways the opposite of an open loop card is a closed loop card which can only be used to make purchases from a single company or retailer like a department store the basics of an open loop cardany charge card that is widely accepted at a variety of merchants and locations is considered an open loop card open loop cards can take a variety of forms open loop cards are what most people think of when they think of credit cards a piece of plastic issued by their bank credit union or financial services company that they can use to purchase goods or services at a variety of places both in person and on line every month the cardholder receives a statement with his charges for that period which he can pay off in full or in part this sort of card is issued to customers by a financial institution in partnership with that institution s processing network visa or mastercard american express and discover act as both their own issuing bank and network processor the debit card tied to your checking account which deducts funds from it immediately when you make a purchase is also an open loop card like credit cards debit cards work in partnership with a network processor and include its branded logo debit cards can be used anywhere that their processing network is accepted prepaid cards loaded with funds for future use can be open loop cards too general prepaid cards are reloadable and can be consistently used for payments and recurring billing gift cards usually defined as cards that can usually only be used until the loaded funds have been depleted are open loop if they are not specific to a certain store some prepaid cards may also be used for public assistance benefits for example certain prepaid assistance cards might allow qualifying individuals to purchase food at any grocery store that accepts visa flexible spending account cards are also a type of open loop prepaid card which can be used to make qualifying health care purchases from any merchant that accepts the branded processor there are also open loop payment cards that can be used as payroll cards to pay workers who don t have bank accounts can t receive direct deposits and would have to pay a fee to cash a check employers partner with payroll card issuers to provide this card as a benefit for their employees some of these cards come with numerous fees but workers can use them anywhere that the network brand is accepted annual growth rate of open loop pre paid cards through 2023 source mercator advisory group forecast co branded cardsalthough they may have their own proprietary cards many retailers are also team up with a bank and a credit card network processor to offer open loop credit cards like an amazon visa or a saksfirst mastercard known as co branded cards because they bear both the logos of the retailer and the card company these cards offer the best of both worlds so to speak they can be used anywhere but when used in the store let cardholders accrue rewards points and get perks and privileges like free delivery or special sale days unlike proprietary store cards however these co branded cards generally have annual fees | |
what is an open market | an open market is an economic system with little to no barriers to free market activity an open market is characterized by the absence of tariffs taxes licensing requirements subsidies unionization and any other regulations or practices that interfere with free market activity open markets may have competitive barriers to entry but never any regulatory barriers to entry | |
how an open market works | in an open market the pricing of goods or services is driven predominantly by the principles of supply and demand with limited interference or outside influence from large conglomerates or governmental agencies open markets go hand in hand with free trade policies which are designed to eliminate discrimination against imports and exports buyers and sellers from different economies may voluntarily trade without a government applying tariffs quotas subsidies or prohibitions on goods and services which are considerable barriers to entry in international trade open markets vs closed marketsan open market is considered highly accessible with few if any boundaries preventing a person or entity from participating the u s stock markets are considered open markets because any investor can participate and all participants are offered the same prices prices only vary based on shifts in supply and demand an open market may have competitive barriers to entry major market players might have an established and strong presence which makes it more difficult for smaller or newer companies to penetrate the market however there are no regulatory barriers to entry an open market is the opposite of a closed market that is a market with a prohibitive number of regulations constraining free market activity closed markets may restrict who can participate or allow pricing to be determined by any method outside of basic supply and demand most markets are neither truly open nor indeed closed but fall somewhere between the two extremes the u s canada western europe and australia are relatively open markets while brazil cuba and north korea are relatively closed markets 1a closed market which is also called a protectionist market attempts to protect its domestic producers from international competition in many middle eastern countries foreign firms can only compete locally if their business has a sponsor which is a native entity or citizen who owns a certain percentage of the business 2 the nations that adhere to this rule are not considered open relative to other countries example of an open marketin the united kingdom several foreign companies compete in the generation and supply of electricity thus the united kingdom has an open market in the distribution and supply of electricity 3 the european union eu believes that free trade can only exist when businesses can fully participate therefore the eu ensures that its members have access to all markets 4 | |
what are open market operations omos | open market operation omo is a term that refers to the purchase and sale of securities in the open market by the federal reserve fed the fed conducts open market operations to regulate the supply of money that is on reserve in u s banks the fed purchases treasury securities to increase the money supply and sells them to reduce it by using omos the fed can adjust the federal funds rate which in turn influences other short term rates long term rates and foreign exchange rates this can change the amount of money and credit available in the economy and affect certain economic factors such as unemployment output and the costs of goods and services investopedia xiaojie liuunderstanding open market operations omos to understand open market operations you first have to understand how the fed the central bank of the u s implements the nation s monetary policy in an effort to keep the u s economy on an even keel and to forestall the ill effects of uncontrolled price inflation or deflation the board of governors of the federal reserve sets what s called a target federal funds rate 1the federal funds rate is the interest rate that depository institutions charge each other for overnight loans this constant flow of money allows banks to earn a return on excess cash in their fed balances while maintaining the reserves required to meet the demands of customers 2as a benchmark the federal funds rate influences a variety of other rates from savings deposit rates to home mortgage rates and credit card interest rates 1open market operations is one of the tools that the fed uses to keep the federal funds rate at its established target the u s central bank can lower the interest rate by purchasing securities and injecting money into the money supply similarly it can sell securities from its balance sheet take money out of circulation and put upward pressure on interest rates the board of governors of the federal reserve sets a target federal funds rate and then the federal open market committee fomc implements the open market operations to achieve that rate 3types of open market operationsthere are two types of omos permanent open market operations and temporary open market operations permanent open market operations refer to the fed s outright purchase or sale of securities for or from its portfolio permanent omos are used to achieve traditional goals for example the fed will adjust its holdings to put downward pressure on longer term interest rates and to improve financial conditions for consumers and businesses permanent omos are also used to reinvest principal received on currently held securities 4temporary open market operations are used to add or drain reserves available to the banking system on a short term basis they address reserve needs that are deemed to be transitory unlike permanent omos which involve outright purchases or sales temporary omos are temporary transactions they re either repurchase agreements repos or reverse repurchase agreements reverse repos 4a repo is a transaction where the fed s trading desk buys securities and agrees to sell them back at a future date a reverse repo involves the fed selling securities with the agreement that it will buy them back in the future overnight reverse repos are currently used by the fed to maintain the federal funds rate in its fomc established target range 4u s treasury securities or treasuries are government bills notes and bonds that are purchased by many individual consumers they re also purchased and held in large quantities by various types of financial institutions they are backed by the full faith and credit of the government and are considered a safe investment treasuries are first issued by the government and then traded in the secondary market expansionary and contractionary monetary policythe fed s monetary policy can be expansionary or contractionary 5if the fed s goal is to expand the money supply and boost demand the policy is expansionary the fed will buy treasuries to pour cash into the banks that encourages banks to lend the excess money that it doesn t have to keep in reserve out to consumers and businesses as the banks compete for customers interest rates drift downwards consumers are able to borrow more to buy more businesses are eager to borrow more to expand 5if the fed s goal is to contract the money supply and decrease demand the policy is contractionary the fed will sell treasuries to pull money out of the system less money in the economy means interest rates drift upwards and borrowing decreases consumers pull back on their spending businesses trim their plans for growth economic activity slows down 5benefits of open market operationsopen market operations allow the federal reserve or the central banks in other countries to prevent price inflation or deflation without directly interfering in the market economy instead of using regulations to control lending the fed can simply raise or lower the cost of borrowing money this allows the federal reserve to moderate the business cycle and reduce economic shocks during recessions the central bank lowers the cost of borrowing money encouraging business activity and growth in times of froth the fed increases the cost of borrowing money in order to rein in speculation and deflate potential bubbles open market operations can also be used to affect job growth by lowering interest rates the fed can make it easier to start businesses and hire workers resulting in increased employment example of open market operationsin 2019 the federal reserve used temporary omos term and overnight repos to support a healthy supply of bank reserves during what it referred to as periods of sharp increases in non reserve liabilities and to mitigate the risk of money market pressures that could adversely affect policy implementation 6it also used repos to counteract the stress caused by covid in 2020 and to ensure that banks could maintain plentiful amounts of reserves repos also helped accommodate the smooth functioning of short term u s dollar funding markets 6open market operations vs quantitative easingas discussed above open market operations is one of the fed s policy tools frequently used to expand the money supply and support economic activity or contact the money supply and slow that activity quantitative easing qe is an alternate non traditional tool that the fed also uses for monetary policy purposes essentially it involves the buying of securities on a very large scale to spur or steady the economy the fed normally employs quantitative easing after other monetary policy tools have been used but something more is needed to boost slow lending and economic activity for instance qe may be used when interest rates are already low but economic output is still less than what the fed believes is healthy | |
why does the federal reserve conduct open market operations | open market operations are used by the federal reserve to move the federal funds rate and influence other interest rates it does this to stimulate or slow down the economy the fed can increase the money supply and lower the fed funds rate by purchasing usually treasury securities similarly it can raise the fed funds rate by selling securities from its balance sheet this takes money out of circulation and pressures interest rates to rise | |
what are permanent open market operations | the term permanent open market operations refers to outright purchases or sales of securities by a central bank that won t be reversed in the short term to adjust the money supply permanent omos are the opposite of temporary open market operations which involve repurchase and reverse repurchase agreements that are designed to temporarily add reserves to the banking system or drain reserves from it 7 | |
what is the fed funds rate | the federal funds rate is the rate at which depository institutions lend available balances held by the fed to each other overnight | |
how does the federal funds rate affect banks | financial institutions typically base interest rates for consumer and business loans on the federal funds rate for example as the fed conducts omos that raise or lower the fed funds rate banks and credit card companies will change their rates accordingly the bottom linein open market operations the federal reserve buys or sells securities on the open market to raise or lower interest rates they are one of the tools that the fed has at its disposal to boost or slow down the country s economic activity by engaging in open market operations the fed injects or drains funds from the nation s money supply open market operations can be permanent or temporary the permanent type of omo involves the outright purchase or sale of securities temporary omos involve buying or selling securities with the agreement to reverse the transaction in the near future | |
what is open market rate | the open market rate is the rate of interest paid on any debt security that trades in the open market interest rates for such debt instruments as commercial paper and banker s acceptances would fall under the category of open market rates debt securities include government bonds corporate bonds certificate of deposit cd municipal bonds and preferred stock breaking down open market rateopen market rates are sensitive and can frequently fluctuate these rates respond directly to changes in supply and demand pressures within the open marketplace distinguishing between open market rate and open market operations is essential the latter is the structure in which the federal reserve can affect and control the supply of reserve balances available in the banking system this control is one of the primary tactics used by the federal reserve to implement monetary policy 1 open market operations typically involve the buying and selling of government securities by one central bank in the open market these transactions allow for the expansion or reduction of the amount of money in the banking system at a given time the purchase of securities creates an infusion of cash into the banking system which promotes growth by contrast when securities sell this will have the opposite effect and will shrink the economy other rates that effect the open marketopen market rate differs from the discount rate and various other official rates that are set by the federal reserve the discount rate is the interest rate applied to commercial banks and other depository financial institutions for loans received from the federal reserve s discount window the federal open market committee fomc a committee within the federal reserve system establishes a target for the federal funds rate which is the interest that banks charge each other to makes overnight loans from their federal reserve funds 2 the fomc then uses activity within the open market for government securities to try and achieve that rate this rate is significant because the federal funds rate in turn influences other significant categories of interest rates including the open market rate the secondary market and open market ratesthe open market rates apply to any debt instrument that trades in the secondary market where investors buy and sell securities from each other as opposed to buying them directly from the issuing company this secondary market is sometimes also referred to as the aftermarket it involves investors making deals among themselves without having to deal with the entity that initially issued the securities this type of trading activity is what most people probably envision when they think about the stock market the secondary market is a category that would include the well known national exchanges such as the nasdaq and the new york stock exchange bank commercial loan rates do not fall into this category as fed policy primarily determines them | |
what is an open market transaction | an open market transaction is an order placed by an insider after all of the appropriate documentation has been filed with the securities and exchange commission sec to buy or sell restricted securities openly on an exchange an open market transaction is a legal way for an individual with insider information of their company to trade securities without violating insider trading laws understanding an open market transactionthe sec defines an insider as an officer or director of a public company or an individual or entity owning more than 10 of a company s stock 1 | |
are insiders selling their shares because earnings were drastically below estimates and they expect the share price to fall are insiders buying shares because they created a successful new product that will send the share price skyrocketing | the trading actions of insiders is an indicator of how the stock will perform in the future but before they can buy or sell their shares known as open market transactions they must file the correct paperwork and follow all procedures the process of an open market transactionan open market transaction is simply an order placed by an insider to buy or sell shares according to the rules and regulations set out by the sec the importance of an open market order is that the insider is voluntarily buying or selling shares at or close to the market price there is no special pricing involved in open market transactions insiders must report open market transactions with the sec and include relevant details about the sale or purchase of the shares because the reason for the transaction is given the filings of open market transactions might be used by other investors to gain some perspective on what insiders may believe about the company for example if an insider sells a considerable portion of their shares through an open market transaction the reasons listed with the filing could cause other investors to change their portfolios in response if the reason was simply to take advantage of stock options provided to a high level officer outsider investors will most likely not react in fact more importance is given to the purchase of shares rather than to the sale of shares as a sale could be done for many reasons sec form 4 needs to be filed by an insider before buying or selling shares form 4 lists information such as the name of the insider their relationship to the company how many shares were traded and at what price 2 | |
why open market transactions are made by insiders | there are many reasons that insiders would buy more shares or sell their current shares as stated above buying shares is more insightful as it indicates a belief in the success of a company the selling of shares can be done for many reasons as simple as that the shareholder needs cash and the insider wants to take advantage of profits their investment has accrued conversely the insider may have weighed long term considerations about the company or industry that prompted the sale of those shares the same could be said about the purchase of more shares in the company | |
when certain open market transactions occur companies might issue press statements about the open market transactions that involve prominent insiders buying shares for example if a chair buys one million shares in their own company an accompanying statement could declare this is an affirmation of faith in the management | the purchase price of those shares will also be listed there might also be a reference to how many shares in the company the insider will own after the transaction is complete open market operationsit is important to note that open market transactions differ from central banking programs known as open market operations under such programs the federal reserve purchases or sells government securities like bonds in the open market alongside investors open market operations are used as a form of monetary policy to control the money supply by impacting interest rates and liquidity in the economy this action is typically used during or after a financial crisis | |
what are open mouth operations | open mouth operations are speculative statements made by the federal reserve system frs to influence interest rates and rising prices within an economy called inflation open mouth operations are the announcements by the fed also known as the central bank when it informs exchanges where the preferred interest rates should be and not the action of the sale or purchase of u s treasury securities 1the potential use of open market operations by the central bank is to reach target interest rates their announcement typically causes the market to react marketplace reactions tend to adjust interest rates without the need for the central bank to take action understanding open mouth operationsopen mouth operations broadcast where the fed or central bank believes interest rates and inflation should be in the short and medium term when an action is taken on a fed statement it is known as open market operations omo open market operations omo refer to the buying and selling of government securities in the open market to expand or contract the amount of money in the banking system open market operations as a result of open mouth operationsthere are several forms of open market operations omo the most common of which is the sale of government or treasury department securities if marketplace response does not move interest rates and inflation as intended by the fed they may take steps themselves to enact the changes buying and selling government bonds allows the fed to control the supply of reserve balances held by banks which helps the fed increase or decrease short term interest rates as needed purchases of treasury securities inject money into the economy and stimulate growth while selling those same securities can cause the economy to contract regarded as a flexible tool the federal reserve controls monetary policy in the u s as it facilitates the omo process to adjust and manipulate the federal funds rate the federal funds rate is the standard paid when banks borrow funds from one another the fed funds rate is one of the most important interest rates in the u s economy it affects monetary and financial conditions critical aspects of the broad economy including employment and short term interest rates for everything from homes to credit cards during its meeting on march 15 16 2022 the federal open market committee fomc announced a hike in the fed funds rate to combat rising inflation the target rate range was increased by 25 or 25 basis points for the first time since 2018 the target range went from 0 to 25 to 25 to 50 2 | |
an open offer is a secondary market offering similar to a rights issue in an open offer a shareholder is allowed to purchase stock at a price that is lower than the current market price the purpose of such an offer is to raise cash for the company efficiently | understanding open offeran open offer differs from a rights issue offering in that investors are unable to sell the rights that come with their purchases to other parties in a traditional rights issue the trading of transferable rights connected with shares occurs on the exchange that currently lists the issuer s common stock e g nyse or nasdaq these can also be listed over the counter otc some investors see a secondary market offering as a harbinger of bad news as it causes stock dilution also the open offer could signal that the company stock is currently overvalued in both a rights issue and open offer a company allows existing shareholders to purchase additional shares directly from the company in proportion to what they currently own this is to prevent dilution to existing shareholders given the lack of dilution in contrast with traditional equity issues and secondary offerings such an issue does not require shareholder approval this is if the issue is less than 20 of the total shares outstanding similarities between a rights issue and an open offerboth a rights issue and open offer opportunity generally last for a fixed time period often 16 30 days this begins on the day the issuer s registration statement for the rights offering becomes effective no federal securities laws mandate a specific time period for a rights issue however with both rights issues and open offers if an investor lets the time period for the opportunity expire she will not receive any cash while rights issues are often also priced at a subscription below the current market price as with an open offer these rights are transferable to external investors other types of traditional rights issues include a direct rights issue and insured rights offering also called a standby rights offering to prepare for any rights offering an issuer must provide official documentation to shareholders along with marketing materials the issuer must obtain the exercise certificates and payment from shareholders and file the required securities and exchange commission sec and exchange documentation these are key steps but not a comprehensive set as all issues differ | |
what is an open order | an open order is an un filled or working order that is to be executed when an as yet unmet requirement has been met before it is cancelled by the customer or expires the customer has the flexibility to place an order to buy or sell a security that remains in effect until their specified condition has been satisfied because they are often conditional many open orders are subject to delayed executions since they are not market orders sometimes a lack of market liquidity for a particular security could also cause an order to remain open understanding open ordersopen orders sometimes called backlog orders can arise from many different order types market orders which cannot have restrictions are typically filled instantaneously or cancelled there are rare instances when market orders remain open till the end of the day at which time the brokerage will cancel them open orders are usually limit orders to buy or sell buy stop orders or sell stop orders these orders basically offer investors a bit of latitude especially in price in entering the trade of their choosing the investor is willing to wait for the price that they set before the order is executed the investor can also choose the time frame that the order will remain active for the purpose of getting filled if the order does not get filled during that specified duration than it will be deactivated and said to have expired open orders often have a good til cancelled gtc option that can be chosen by the investor investor can also at any time after placing the order cancel it most brokerages have stipulations that state that if open orders remain active not filled after several months they will automatically expire they are often used to measure market depth open order risksopen orders can be risky if they remain open for a long period of time after you place an order you are on the hook for the price that was quoted when the order was placed the biggest risk is that the price could quickly move in an adverse direction in response to a new event if you have an order that s open for several days you may be caught off guard by these price movements if you re not constantly watching the market this is particularly dangerous for traders using leverage which is why day traders close all of their trades at the end of each day in addition to orders that remain open traders must also be cognizant of open orders to close you might have a take profit order in place one day but if the stock becomes materially more bullish you must remember to update the trade to avoid prematurely selling shares the same goes for stop loss orders that may need to be adjusted to account for certain market conditions the best way to avoid these risks is to review all open orders each day or ensure that you close all orders at the end of each day by using day orders rather than good til canceled gtc orders this way you are always aware of your open positions and can make any adjustments or re initiate new orders at the beginning of the next trading day | |
what is open outcry | open outcry was a popular method for communicating trade orders in trading pits before 2010 the verbal and hand signal communication used by traders at stock option and futures exchanges are now rarely employed replaced by faster and more accurate electronic order systems signals and shouts made in a particular manner and sequence would convey trading information intentions and acceptance in the trading pits understanding open outcrytrading pits are physical sections of trading floors often with risers or uneven floor levels to accommodate eye contact with as many traders as possible where trade orders are communicated face to face traders make a contract when one trader declares they want to sell at a certain price and another trader responds that they will buy at that same price open outcry is similar to an auction where all participants have a chance to compete for orders it leads to transparency efficient markets and fair price discovery because trading can occur between any two participants at any given time it differs from over the counter trading where trading is negotiated between two parties privately most of the trading in pits is conducted between one or more members in the crowd of the pit and a smaller number of traders that stand at the edge of the pits as market makers most of the order flow will come through these market makers to the traders in the pits the length of the trading day differs between open outcry exchanges and those that use electronic trading such as the globex regular market hours typically run from 8 30 a m to 4 15 p m eastern standard time open outcry sessions for some commodities such as corn futures and options cbot run from 9 30 a m to 1 15 p m first introduced in 1992 the globex is the first global electronic trading system for futures and options the chicago mercantile exchange cme developed the globex automated system electronic trading on globex is available nearly 24 hours a day from sunday evening through late friday afternoon there is a short break each day between closing one day s trades and reopening the next day s trading this break varies from 30 to 60 minutes depending on the product of trading the end of open outcry tradingwhile open outcry dates back centuries as the dominant method for trading most exchanges now use electronic trading systems these automated systems reduce costs improve trade execution speed and create an environment less prone to manipulation they also make it easier to aggregate information for all interested parties electronic trading is now available often for free on home computers and smartphones some professional traders lament that electronic trading cannot capture the intangible information upon which pit traders relied as an example electronic trading is void of the subjective assessment of a buyer or seller s intentions or motivations electronics do not relay the mood of the trading pit which some pit traders found very useful in making trades a feel for this pit dynamic is now only available in past movies and documentaries trading places starring eddie murphy and dan aykroyd provided a rather comical though somewhat informative look into the methods frustrations and information asymmetry that traders experienced in the pits it is still referenced by people experienced in the profession trying to describe what it used to be like despite such pop culture references the reality is that trading is far more efficient in current times than in days past as evidenced by increased execution speeds and decreased trading fees thus it is unlikely that open outcry will ever return or grow as a method for traders operating at an exchange | |
what is an open position | an open position in investing is any established or entered trade that has yet to close with an opposing trade an open position can exist following a buy a long position a sell or a short position in any case the position remains open until an opposing trade takes place open position explainedfor example an investor who owns 500 shares of a certain stock is said to have an open position in that stock when the investor sells those 500 shares the position closes buy and hold investors typically have one or more open positions at any given time short term traders may execute round trip trades a position opens and closes within a relatively short period day traders and scalpers may even open and close a position within a few seconds trying to catch minimal but multiple price movements throughout the day open positions and riskan open position represents market exposure for the investor the risk exists until the position closes open positions can be held from minutes to years depending on the style and objective of the investor or trader of course portfolios are composed of many open positions the amount of risk entailed with an open position depends on the size of the position relative to the account size and the holding period generally speaking long holding periods are riskier because there is more exposure to unexpected market events the only way to eliminate exposure is to close out the open positions notably closing a short position requires buying back the shares while closing long positions entails selling the long position open position diversificationthe recommendation for investors is to limit risk by only holding open positions that equate to 2 or less of their total portfolio value by spreading out the open positions throughout various market sectors and asset classes an investor can also reduce risk through diversification for example holding a 2 portfolio position in stocks spread out through multiple sectors such as financials information technology health care utilities and consumer staples along with fixed income assets such as government bonds represents a diversified portfolio investors adjust the allocation per sector according to market conditions but keeping the positions to just 2 per stock can even out the risk using stop losses to close out positions is also recommended to curtail losses and eliminate exposure of underperforming companies investors are always susceptible to systemic risk when holding open positions overnight open position and day tradingday traders buy and sell securities within one trading day the practice is common in the forex and stock markets however day trading is risky and not for the novice trader a day trader attempts to close all their open positions before the end of the day if they don t they hold on to their risky position overnight or longer during which time the market could turn against them day traders are typically disciplined experts they have a plan and stick to it moreover day traders often have plenty of money to gamble on day trading the smaller the price movements the more money is required to capitalize on those movements | |
what is an open position | an open position in investing is any established or entered trade that has yet to close with an opposing trade an open position can exist following a buy a long position a sell or a short position in any case the position remains open until an opposing trade takes place open position explainedfor example an investor who owns 500 shares of a certain stock is said to have an open position in that stock when the investor sells those 500 shares the position closes buy and hold investors typically have one or more open positions at any given time short term traders may execute round trip trades a position opens and closes within a relatively short period day traders and scalpers may even open and close a position within a few seconds trying to catch minimal but multiple price movements throughout the day open positions and riskan open position represents market exposure for the investor the risk exists until the position closes open positions can be held from minutes to years depending on the style and objective of the investor or trader of course portfolios are composed of many open positions the amount of risk entailed with an open position depends on the size of the position relative to the account size and the holding period generally speaking long holding periods are riskier because there is more exposure to unexpected market events the only way to eliminate exposure is to close out the open positions notably closing a short position requires buying back the shares while closing long positions entails selling the long position open position diversificationthe recommendation for investors is to limit risk by only holding open positions that equate to 2 or less of their total portfolio value by spreading out the open positions throughout various market sectors and asset classes an investor can also reduce risk through diversification for example holding a 2 portfolio position in stocks spread out through multiple sectors such as financials information technology health care utilities and consumer staples along with fixed income assets such as government bonds represents a diversified portfolio investors adjust the allocation per sector according to market conditions but keeping the positions to just 2 per stock can even out the risk using stop losses to close out positions is also recommended to curtail losses and eliminate exposure of underperforming companies investors are always susceptible to systemic risk when holding open positions overnight open position and day tradingday traders buy and sell securities within one trading day the practice is common in the forex and stock markets however day trading is risky and not for the novice trader a day trader attempts to close all their open positions before the end of the day if they don t they hold on to their risky position overnight or longer during which time the market could turn against them day traders are typically disciplined experts they have a plan and stick to it moreover day traders often have plenty of money to gamble on day trading the smaller the price movements the more money is required to capitalize on those movements | |
what is open trade equity ote | open trade equity ote is the net of unrealized gain or loss on open derivatives positions put differently ote is the paper gains and losses represented by the present market value and the price paid or received for a position once the position is closed the gain or loss will become realized understanding open trade equityote is especially important for margin investors as fluctuations impact the available equity in their account if the unrealized losses cause the available equity to drop below their contracted maintenance margin then a margin call is issued where the investor is forced to deposit additional funds to bring the available equity back above the contracted maintenance margin or liquidate all or a portion of their open positions because maintenance margins are contracted with a broker investors are legally bound to maintain their margins in the event an investor is unable or unwilling to deposit cash or sell holdings at the time of a margin call their brokerage is empowered to close open positions from their client s portfolio at their discretion in order to restore the account to its minimum value open trade equity ote measures the difference between the initial trade price of all open positions and the last traded price of each of those positions the term is derived from the fact that the established positions have not yet been offset it is useful in providing the trader with an accurate snapshot of the actual value of an account as all open positions are marked to market in other words how much equity money is in the account if all the positions were closed at the prevailing market rates example of otefor instance say a trader has 10 000 in an account and uses it to purchase 50 shares of xyz at 200 per share the total investment is 10 000 and the ote at the instance of the trade being executed is zero the next day the value of each share increases to 250 now the trader has 2 500 in unrealized gains in that trade which means that the ote for that holding is also up 2 500 and the total equity in the account is up to 12 500 if they were to liquidate this position then the gains are said to have been realized the account balance would have increased by 2 500 to 12 500 and the ote would be zero if one does not liquidate the position and the price drops to 100 they would incur a 5 000 unrealized loss on that holding unless the position is sold or closed this loss remains unrealized but the ote is negative 5 000 and the total account equity is down to 5 000 a negative ote indicates a paper loss a positive ote shows a paper gain open trade equity at margin callthe financial industry regulatory authority finra requires that any investor wishing to open a margin account must begin with at least 2 000 in cash or securities 1 finra requires that the investor agree to a maintenance margin of at least 25 meaning that the investor must maintain an account balance of at least 25 of the total market value of the securities held in the account at all times 2 typically this maintenance margin is contracted at a higher percentage and it is common practice for maintenance margins to be 30 or more for instance an investor wants to buy 500 shares of a stock trading at 20 share they do not have the 10 000 needed to do this so they open a 5 000 account with a broker who has a 50 initial margin and a 35 maintenance margin requirement investor purchases 10 000 worth of shares which means that they have borrowed 5 000 from the broker at the instance of execution the ote is zero total value of investment is 10 000 initial margin is 5 000 50 x 10 000 and the maintenance margin is 3 500 35 x 10 000 the price begins to decline to where the total value of 500 shares falls to 6 000 which means that the ote is negative 4 000 the 5 000 that the investor put up as margin is now worth 3 000 5 000 50 x 4 000 this is below the 3 500 maintenance margin requirement so the investor receives a margin call at this point the investor will be required to make a deposit into the margin account to satisfy the 50 requirement in this case 2 000 this can take the form of a cash deposit or marginable securities they may also choose to take a loss on the investment by liquidating all or a portion of their open positions thereby reducing their margin requirements this usually results in realizing a loss on their trade | |
what is the opening bell | the opening bell refers to the moment a securities exchange opens for its normal daily trading session the time and conditions of the opening bell differ from one exchange to another the most famous opening bell is the one used by the new york stock exchange to signal the start of trading understanding the opening bellsince 1985 the new york stock exchange nyse has used the opening bell to start its trading session at 9 30 a m eastern time at the nyse there is a physical bell and an automated ringer that sounds at the beginning of each trading day 1 on the nasdaq exchange where this is no physical trading floor the opening of the market is referred to as the opening bell but it is symbolic in significance physical trading floors have all but disappeared over the years with the rise of electronic trading investors and traders use the term opening bell to describe the opening of a given market the physical ringing of the opening bell has become a ceremonious event where dignitaries visiting the stock markets or companies that are trading for the first day are given the honor of ringing the bell this serves a useful function of drawing attention to the day s trading activities and helps maintain the interest of investors for this reason media companies such as cnbc fox and cheddar have on location fixtures in the last of the well known formal physical trading floors in existence the nyse without these media companies having a place to report on the trading session the exchange would find it hard to justify the continued operation of the trading floor since so much there is automated anyway accordingly the nasdaq exchange which was electronic from its inception has no physical trading floor and has created a media space for the purpose of featuring its opening bell ceremonies 2the first bell was actually a large gong used on the nyse to officially notify brokers and dealers that it was okay to begin the work of auctioning prices however in 1903 the gong was replaced by an electronically operated brass bell the bell is accompanied by the gavel that is used in conjunction with the closing bell in recognition of 19th century stock calls 1the opening and closing bell can be viewed each day on the the new york stock exchange s website the new york stock exchange and the nasdaq exchange open at 9 30 a m eastern time and close at 4 00 p m eastern time but different exchanges all around the world open at different times of the day for example many futures markets have an opening bell followed by a morning and afternoon session the options markets also tend to have different opening bells depending on the exchange traders should be aware of these times before trading in the market in the foreign exchange forex market there is no opening bell since the market operates 24 hours a day six days per week the start of the trading day however is often considered to be 5 00 p m eastern time until the same time the next day the original opening bell at the nyse was a chinese gong trading before the opening bellmany exchanges offer pre market trading that occurs before the opening bell during this time traders and investors who have access to the extended session trading may place trades with one another but there are no market specialist or market makers during these hours and trading is done with limit orders only trades must therefore be exact matches in terms of size and offer time this means that trades made in these hours may take more time to fill and be less efficient in their pricing as a result fewer traders participate in such sessions one notable exception is when earnings announcements are made if a company announces its quarterly results before the opening bell then an unusual flurry of activity is likely to take place on that particular stock the added participants all rushing to make trades based on the new information means that trading in those moments can occasionally mimic the speed and efficiency of price action that a regular session might provide this flurry of activity may also occur sporadically based on news that is released overnight or before the opening bell while pre market trading has its advantages there are several important risk factors pre market trading tends to have less liquidity than trading during regular hours which means that bid ask spreads may be wider and price action may be significantly more volatile many pre market and after hours traders are also institutional investors trading in mutual funds and hedge funds which means that retail investors must compete with professionals who are better equipped to work their orders than the average individual investor some markets such as the forex and cryptocurrency markets do not have an opening bell trading in those markets occurs every day 24 7 | |
what time is the opening bell on wall street | the new york stock exchange rings the opening bell at 9 30 am every day except weekends and holidays the nasdaq opens at the same time but as an automated market the bell is purely ceremonial | |
why does the stock market ring the bell every opening and closing | the opening and closing bells on the stock market tell traders when they are allowed to start or stop trading in early stock markets this role was played by a gavel in today s world of automated markets the bell is less important but it still plays a symbolic role | |
why do they clap at the opening bell | the opening bell is an important symbol of the success of the stock market under capitalism and the privilege of ringing it is often reserved for celebrities or vips traders often applaud when the market opens particularly if the person ringing the bell is someone famous or highly accomplished | |
what time is the opening bell for the nasdaq | the nasdaq opens at 9 30 am on weekdays although trading is automatic the opening bell ritual has strong symbolic importance many business people see an opportunity to ring the bell as a chance to build their brands and highlight their companies | |
how do i find out who rang the opening bell today | the new york stock exchange has a bell calendar that lists the people who are invited to ring the opening bell every day other stock exchanges may have their own bell calendars as well 3 | |
the opening cross is a method the nasdaq uses to determine the opening price for stocks on its exchange this method takes data from the trading interest for a particular security two minutes before the market opens nasdaq makes this information available to all investors | according to nasdaq the method for the opening and closing crosses gives all investors access to the same information and ensures their orders get the same treatment it also matches buyers and sellers to provide market liquidity that is investors can find buyers quickly if needed understanding the opening crossshare prices can change anytime even when a stock exchange like the nasdaq is closed events and news can come out when it s not open which causes a stock to open lower or higher in the morning than its previous day s closing price as a result many retail and even professional traders won t execute orders too close to the opening or closing of a market especially with market orders which are executed immediately fearing volatility either up or down the opening cross tries to limit this volatility by reflecting the change in sentiment for a stock since the previous day s close this prevents surprises shortly after the nasdaq opens typically one of the most active trading periods investors can then have greater confidence that quoted prices fairly reflect supply and demand during the first minutes of the trading day |
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