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Real Estate Mortgage Investment Conduit – Explained

by TheBusinessProfessor | Feb 23, 2025 | Investments, Trading, and Financial Markets

What is a Real Estate Mortgage Investment Conduit?A Real Estate Mortgage Investment Conduit is a special purpose vehicle (entity), authorized by the Tax Reform Act of 1986, that holds a fixed pool of mortgages and issues multiple classes of interests in itself to...

Redeemable Bonds – Explained

by TheBusinessProfessor | Feb 23, 2025 | Investments, Trading, and Financial Markets

What is a Callable Bond?Callable or redeemable bonds can be redeemed or paid off by the issuer before it reaches the date of its maturity. The issuer of such bonds is allowed to pay back its obligation to the bondholder before maturity. The issuer can buy back the...

Regulation T – Explained

by TheBusinessProfessor | Feb 23, 2025 | Investments, Trading, and Financial Markets

What is Regulation T?Regulation T is a Federal Reserve Boards regulation that governs the investors use of a cash account for purchasing securities and regulates the credit extension limit by security brokers and dealers. The regulation prescribes that security...

Risk Free Rate of Return – Explained

by TheBusinessProfessor | Feb 23, 2025 | Investments, Trading, and Financial Markets

What is the Risk-Free Rate of Return?The risk-free rate of return is the optimum rate of return on an investment with zero risk of default or loss. Restated, it is a hypothetical rate of interest that an investor would expect from an investment without incurring any...

Risk Premium – Explained

by TheBusinessProfessor | Feb 23, 2025 | Investments, Trading, and Financial Markets

What is a Risk Premium?The risk premium is the difference between the risk-free rate of return and the rate of return of an individual stock that carries risk. The stocks with a higher amount of risk offer additional returns to compensate for the risk and entice the...

Reprice (Stock Options) – Explained

by TheBusinessProfessor | Feb 23, 2025 | Investments, Trading, and Financial Markets

What does it mean to Reprice Stock Options?Repricing is a strategy of replacing the worthless stock options held by employees with new options. Companies use this strategy to deal with underwater stock options. Underwater stock options are those whose exercise price...
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