Underwater
What is 'Underwater' An option that would be worthless if it expired today. An underwater option may be either a call or put option. A call option is underwater when its strike price is higher than the market price of the underlying asset. A put option is underwater when its strike price is lower than the market...
Underpricing
When a company offers its stock to the public for the first time, it's called an initial public offering, or IPO. IPOs can be a great opportunity for investors, but only if the stock is priced correctly. When a company prices its IPO below its market value, it's called underpricing. In this article, we'll explore what underpricing is, why...
Bankruptcy
DefinitionBankruptcy is a legal status of a person or other entity that cannot repay debts to creditors. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debtor. Bankruptcy is not the only legal status that an insolvent person may have, and the term bankruptcy is therefore not a synonym for insolvency. In some countries,...
Mandatorily Redeemable Shares
What are 'Mandatorily Redeemable Shares' Mandatorily redeemable shares are shares owned by an individual or entity which are required to be redeemed for cash or another such property at a stated time or following a specific event. Mandatorily reedemable shares are often issued by employers as a sort of compensation kicker to employees; however, the employer would require the employees...
Underlying Asset
What is an 'Underlying Asset' An underlying asset is the security or commodity underlying a Derivative. The most common type of derivative is a futures contract, and the underlying asset for futures contracts can be anything from agricultural products to financial instruments. For example, a corn futures contract would have corn as its underlying asset, while a stock index futures...
Common Stock
DefinitionCommon stock is a form of corporate equity ownership, a type of security. The terms voting share and ordinary share are also used frequently in other parts of the world; "common stock" being primarily used in the United States. They are known as Equity shares or Ordinary shares in the UK and other Commonwealth realms. This type of share...
Real Gross Domestic Product (GDP)
What is the 'Real Gross Domestic Product (GDP)' Real gross domestic product (GDP) is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy in a given year, expressed in base-year prices, and is often referred to as "constant-price," "inflation-corrected" GDP or "constant dollar GDP." Unlike nominal GDP, real GDP can...
Gross Domestic Product
DefinitionGross domestic product is a monetary measure of the market value of all the final goods and services produced in a specific time period.GDP per capita does not, however, reflect differences in the cost of living and the inflation rates of the countries; therefore using a basis of GDP per capita at purchasing power parity is arguably more useful...
Economic Growth
DefinitionEconomic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP. Economic Growth What is 'Economic Growth' Economic growth is an increase in the capacity of an economy to...
Earnings Before Interest, Taxes, Depreciation, Depletion, Amortization and Exploration Expenses (EBITDAX)
What is 'Earnings Before Interest, Taxes, Depreciation, Depletion, Amortization and Exploration Expenses - EBITDAX' Earnings before interest, taxes, depreciation, depletion, amortization and exploration expenses (EBITDAX) is an indicator of a company's financial performance calculated as: Explaining 'Earnings Before Interest, Taxes, Depreciation, Depletion, Amortization and Exploration Expenses - EBITDAX' EBITDAX is used when reporting earnings for...