High Water Mark (Investment) – Explained

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

Update Table of Contents What is the High-Water Mark in an Investment?How is the High-Water Mark for an Investment Used?High-Water Mark in PracticeValue of a High-Water MarkHigh-Water Marks and the “Free Ride” What is the High-Water Mark in an Investment?A...

Energy or Royalty Trust – Explained

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

What is an Energy Trust?An energy trust is a kind of business entity that invests in operational assets (such as oil, gas and other minerals). The majority of the profits generated from these resources are then distributed to investors. Energy trusts do not invest in...

Zero Cost Collar Option Strategy – Explained

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

What is a Zero Cost Collar?A Zero-Cost Collar, also known as a zero-cost option, equity risk reversal, or hedge wrapper, is an option strategy where an investor holding shares of a particular stock simultaneously buys an out-of-the-money put option (an option to make...

Zero Basis Risk Swap – Explained

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

What is a Zero Basis Risk Swap?A zero basis risk swap (ZEBRA), also called a perfect swap, or actual rate swap, is a swap arrangement between a municipal government and a financial intermediary. Basically, the municipality agrees to receive a floating (variable)...

Yield Curve – Explained

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

What is a Yield Curve?The yield curve is a graphical representation (line plot) of the interest rates of similar quality bonds with varying maturity dates. The most commonly reported yield curves plot the 3-month, 2-year, 5-year, 10-year, and 30-year U.S. Treasury...

Equity Risk Premium – Explained

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

What is an Equity Risk Premium?Equity risk premium refers to rate of profit or return that can be earned on financial instruments above the average rate of return. The equity risk premium is an incentive which motivates risky investors to invest in high-risk assets....