Collar (Trade Strategy) – Explained

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

What is a Collar?A collar is a strategy sued in trade and investment to reduce large losses by setting a limit to the possible gains and losses that can be incurred in an investment. A collar strategy is also called a hedge wrapper, this strategy allows an investor...

Cockroach Theory – Explained

by TheBusinessProfessor | Feb 23, 2025 | Business Finance, Personal Finance, and Valuation Principles

What is the Cockroach Theory?The cockroach theory is a market theory that states that a piece of bad news in the market indicates that there is much more bad news. As suggested by this theory, if one company in a sector reveals a piece of bad news to the public, other...

Clearing Member Trade Agreement – Explained

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

What is a Clearing Member Trade Agreement?A clearing member trade agreement (CMTA) refers to an arrangement that allows an investor to enter derivative trades with different brokers but consolidates these trades with only one brokerage firm for the purpose of the...

Broker of Record – Explained

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

What is a Broker Of Record?A broker of record is a term used in the insurance industry to describe an agent that represents an insured and manages a policy on their behalf. An insured person assigned this agent or broker to represent them and manage the insurance...

V Shaped Recovery – Explained

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is a V-Shaped Recovery?A V-shaped recovery is a term that describes a period of economic decline (recession) and recovery that resembles a V shape. This V shape symbolizes a short trough or decline in an economy, followed by rapid recovery, the first stroke of...

Unqualified Opinion – Explained

by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting

What is an Unqualified Opinion?An unqualified opinion is otherwise known as an unqualified report or a clean report. It is the judgment of an independent auditor about a company which states that the financial records and statements are fairly and accurately presented...

Unqualified Audit – Explained

by TheBusinessProfessor | Feb 23, 2025 | Managerial & Financial Accounting & Reporting

What is an Unqualified Audit?An unqualified audit is a form of an audit of a company’s account and finances done by an independent auditor. Usually, audits are appraisals of a company’s status and how compliant it is to generally accepted accounting...

The Kelly Criterion – Explained

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

What is The Kelly Criterion?The Kelly criterion is a formula used in estimating the growth of capital, it also calculates the expected value of wealth over a long period of time. The Kelly criterion was developed in 1956 by John L. Kelly, Jr and since then has been a...

Time Preference Theory of Interest – Explained

by TheBusinessProfessor | Feb 23, 2025 | Economic Analysis & Monetary Policy

What is the Time-Preference Theory Of Interest?The time preference theory of interest defines interest as the preference of people or a community for a dollar of present over the dollar of future income. Ordinarily, time preference refers to how goods are valued in...

Theta (Options Trading) – Explained

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

What is Theta?Theta evaluates the value of the options price to the passing of time. This calculates the rate, at which the price of options is particularly in terms of time value, rises or decreases as the time to expire approaches. For example, if an option is worth...