Did You Know?
This week's Did You Know
The Chicago Board of Trade (CBOT) was established in 1848.
Previous week Did You Knows
09/19/2011
Alternative investments can be thought of investments outside of
the traditional allocations of stocks, bonds and cash.
09/12/2011
The first hedge fund was created in 1949.
09/05/2011
Event-driven strategies seek to take advantage of over- or
underpriced stocks before or after a major corporate event, such as
a bankruptcy, merger, acquisition or spinoff.
08/29/2011
The term "swap" was first used in the 1980s. The first swap was
put into place by David F. Swensen, who was then senior vice
president at Lehman Brothers and is now the CIO of Yale
University.
08/22/2011
A derivative is a risk transfer contract. Its value results from
the value of an underlying asset, such as a physical commodity, an
interest rate, a company's stock, a stock index or a currency.
08/15/2011
A plain vanilla swap occurs when one party trades at a fixed
rate and one party trades at a floating rate.
08/08/2011
A swap is a confidentially agreed upon contract between two
participants (or participant groups) to swap cash flows on set
dates during the agreed-upon duration of the contract.
08/01/2011
Inverse funds (also called "short" funds) seek to provide the
reverse performance of their benchmark indices. Inverse funds can
provide a way for investors to profit from, or at least hedge their
exposure to, failing indices.
07/25/2011
The term "venture capital" was coined by Benno C. Schmidt, Sr.,
a managing partner at J.H. Whitney & Co., the oldest American
venture capital firm. The term was a shortening of the word
"adventure."
07/18/2011
In 1946, the American Research and Development Corporation
(ARDC) and J.H. Whitney & Company became the first venture
capital firms in the United States.
07/11/2011
A futures contract is a written contract to buy or sell a set
amount of a commodity or financial instrument at a fixed price set
on an upcoming day.
07/04/2011
Options are contracts that give the buyer the privilege to buy
or sell a security, like stocks, at a set price and a set time.
There is no requirement on the part of the buyer to purchase or
trade off options.
06/27/2011
Many hedge funds are notorious for their lack of transparency,
and in 2009 the Hedge Fund Transparency Act was proposed, which
would require certain disclosure compliance for hedge funds.
06/20/2011
In economics, transparency generally means what products,
services or capital assets are available, at what price and in
which location.
06/13/2011
The inventor of ETFs, Nathan Most, was 73 when he developed the
idea. Mr. Most's first career was trading in commodities like
safflower seed and coconut oil.
06/06/2011
Mutual fund prices do not change over the course of a trading
day, but ETFs may be bought and sold and can be bought with
leveraged money and sold short.
05/30/2011
The similarity of mutual funds and ETFs is that they both
represent a pool of investments in which people may buy shares.
But, unlike mutual funds, ETFs can also be traded like stocks.
05/23/2011
Commodities are basic goods that are interchangeable with goods
of the same type. Examples are petroleum, notebook paper, milk or
copper.
05/16/2011
The creation of the first hedge fund is widely accredited to
Australian sociologist, humanitarian and author Alfred Winslow
Jones. Jones was a Harvard graduate, Fortune magazine editor and
Peace Corps volunteer.
05/09/2011
"Delta neutral" is a finance term that refers a position of a
hedged equity. When a portfolio is in delta neutral, it remains
stable despite small changes in the value of the underlying
security.
05/02/2011
Convertible arbitrage is a market-neutral investment strategy
often associated with hedge funds. This market strategy looks for
error in pricing then buys the underpriced investment and sells
short the overpriced investment.
04/25/2011
The Investment Company Act of 1940 is an act of Congress that
aims "to mitigate and...eliminate the conditions...which adversely
affect the national public interest and the interest of investors."
Specifically, the act regulates the relationship between investment
companies and securities exchanges.
04/18/2011
The now defunct International Commerce Exchange was the first
entity to trade currency futures, beginning on Apr. 23, 1970, two
years before the Chicago Mercantile Exchange, which began trading
currency futures in 1972.
04/11/2011
A dedicated short-bias occurs in hedge funds when the investment
takes more short positions than long positions. It is used when it
is believed that the funds will decline in price.
04/04/2011
One of the first short-sell exchanges occurred in February 1609,
when Isaac Le Maire, an original subscriber to the Dutch East India
Company, formed a secret association, a "Groote Companie," to short
the East India Company's shares in anticipation of a rival
French-chartered trading firm.
 
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