FINANCE

1) Underlying Assets - Underlying asset are the financial assets upon which
a derivative’s price is based.
 Underlying assets represent the assets from which derivatives derive their value.
 Knowing the value of an underlying asset helps traders determine the appropriate action
(buy, sell, or hold) with their derivative.

Underlying assets give derivatives their value. For example, an option

on stock XYZ gives the holder the right to buy or sell XYZ at the strike
price up until expiration. The underlying asset for the option is the stock of
XYZ.

An underlying asset can be used to identify the item within the agreement
that provides value to the contract. The underlying asset supports the
security involved in the agreement, which the parties involved agree to
exchange as part of the derivative contract.

2) Derivatives 衍生品
 Derivatives are financial contracts, set between two or more parties, that derive their
value from an underlying asset, group of assets, or benchmark.
 A derivative can trade on an exchange or over-the-counter.
 Prices for derivatives derive from fluctuations in the underlying asset.
 Derivatives are usually leveraged instruments, which increases their potential risks and
rewards.
 Common derivatives include futures contracts, forwards, options, and swaps.

Pros and cons

The advantages of derivative trading include risk mitigation, contract flexibility, and
leveraged speculation. The disadvantages are directly related to the misuse of these products,
which can lead to large losses. International commodities are bought and sold using derivatives.

3) Options
 An option is a contract giving the buyer the right—but not the obligation—to buy (in the
case of a call) or sell (in the case of a put) the underlying asset at a specific price on or before
a certain date.
 People use options for income, to speculate, and to hedge risk.
 Options are known as derivatives because they derive their value from an underlying asset.
 A stock option contract typically represents 100 shares of the underlying stock, but options
may be written on any sort of underlying asset from bonds to currencies to commodities.
 *A call option gives the holder the right to buy a stock and a put option gives the holder the
right to sell a stock. Think of a call option as a down payment on a future purchase.

4) Strike Price - A strike price is a set price at which a derivative contract can be bought or sold
when it is exercised. For call options, the strike price is where the security can be bought by
the option holder; for put options, the strike price is the price at which the security can be
sold.

The strike price is also known as the exercise price.

5) Premium
 Premium can mean a number of things in finance—including the cost to buy an insurance
policy or an option.
 Premium is also the price of a bond or other security above its issuance price or intrinsic
value.
 A bond might trade at a premium because its interest rate is higher than the current market
interest rates.
 People may pay a premium for certain in-demand items.
 Something trading at a premium might also signal it is over-valued.

6) Straddle
 A straddle is an options strategy involving the purchase of both a put and call option for the
same expiration date and strike price on the same underlying security.
 The strategy is profitable only when the stock either rises or falls from the strike price by
more than the total premium paid.
 A straddle implies what the expected volatility and trading range of a security may be by the
expiration date.

* Long straddles involve buying a call and put with the same strike price. For
example, buy a 100 Call and buy a 100 Put. Long strangles, however, involve buying
a call with a higher strike price and buying a put with a lower strike price. For
example, buy a 105 Call and buy a 95 Put.
 7) Futures 期货 - Futures are derivative financial contracts that obligate parties to buy or sell
an asset at a predetermined future date and price.

Difference btw OPTION AND FUTURE.

An option gives the buyer the right, but not the obligation, to buy (or sell) an asset at
a specific price at any time during the life of the contract. A futures contract obligates
the buyer to purchase a specific asset, and the seller to sell and deliver that asset, at
a specific future date

8) Buying on Margin - Buying on margin involves getting a loan from your brokerage
and using the money from the loan to invest in more securities than you can
buy with your available cash. Through margin buying, investors can amplify their
returns — but only if their investments outperform the cost of the loan itself.

9) Securities - fungible and tradable financial instruments used to raise capital in

public and private markets. There are primarily three types of securities: equity—
which provides ownership rights to holders; debt—essentially loans repaid with
periodic payments; and hybrids—which combine aspects of debt and equity.

Stocks, bonds, preferred shares, and ETFs are among the most common examples of
marketable securities. Money market instruments, futures, options, and hedge fund
investments can also be marketable securities.

10) Difference between private and public market?

Privately owned businesses exist in the private business sectors and are
subsidized through institutional financial backers, while public organizations
are traded on an open market on the securities exchange and can be invested
by the entire population.

11) Hybrid - They are complex financial products that combine the features of bonds
and shares. They can provide income, like a bond, but their value can fall
dramatically, like shares. Hybrids can also have features that impact the future value
of your investment.

12)Difference between shares and stock

Similar Terminology. Of the two, "stocks" is the more general, generic term. It is often
used to describe a slice of ownership of one or more companies. In contrast, in common
parlance, "shares" has a more specific meaning: It often refers to the ownership of a
particular company.

13)Difference between stock and bond

The main difference between stocks and bonds is that stocks give you
partial ownership in a corporation, while bonds are a loan from you to a
 company or government. Another big difference is how they generate
profit: stocks must appreciate in value and be sold later on the stock
market, while most bonds pay fixed interest over time.

I can say stock is equity while bonds is debt. If you buy stock, you own
part of company, if you own bond, then the company or gov is indebted
to you

Stocks and bonds generate cash in different ways, too.

To make money from stocks, you’ll need to sell the company’s shares at a
higher price than you paid for them to generate a profit or capital gain.
Capital gains can be used as income or reinvested, but they will be taxed as
long-term or short-term capital gains accordingly.
Bonds generate cash through regular interest payments. The distribution
frequency can vary, but it’s generally as follows:
 Treasury bonds and notes: Every six months until maturity.
 Treasury bills: Only upon maturity.
 Corporate bonds: Semiannually, quarterly, monthly or at maturity.

Inverse performance
Another important difference between stocks and bonds is that they tend
to have an inverse relationship in terms of price — when stock prices rise,
bonds prices fall, and vice versa.
Historically, when stock prices are rising and more people are buying to
capitalize on that growth, bond prices have typically fallen on lower
demand. Conversely, when stock prices are falling and investors want to
turn to traditionally lower-risk, lower-return investments such as bonds,
their demand increases, and in turn, their prices.
Bond performance is also closely tied to interest rates. For example, if you
buy a bond with a 2% yield, it could become more valuable if interest rates
drop, because newly issued bonds would have a lower yield than yours. On
the other hand, higher interest rates could mean newly issued bonds have a
higher yield than yours, lowering demand for your bond, and in turn, its
value.

The risks and rewards of each

 Stock risks
The biggest risk of stock investments is the share value decreasing after
you’ve purchased them. There are several reasons stock prices fluctuate
(you can learn more about them in our stock starter guide), but in short, if a
company’s performance doesn’t live up to investor expectations, its stock
price could fall. Given the numerous reasons a company’s business can
decline, stocks are typically riskier than bonds.
However, with that higher risk can come higher returns. The market's
average annual return is about 10%, while the U.S. bond market, measured by
the Bloomberg Barclays U.S. Aggregate Bond Index, has a 10-year total
return of 4.76%.

Bond risks
U.S. Treasury bonds are generally more stable than stocks in the short term,
but this lower risk typically translates to lower returns, as noted above.
Treasury securities, such as government bonds and bills, are virtually risk-free,
as these instruments are backed by the U.S. government.
Corporate bonds, on the other hand, have widely varying levels of risk and
returns. If a company has a higher likelihood of going bankrupt and is
therefore unable to continue paying interest, its bonds will be considered
much riskier than those from a company with a very low chance of going
bankrupt. A company’s ability to pay back debt is reflected in its credit
rating, which is assigned by credit rating agencies such as Moody’s and
Standard & Poor’s.
Corporate bonds can be grouped into two categories: investment-grade
bonds and high-yield bonds.
 Investment grade. Higher credit rating, lower risk, lower returns.
 High-yield (also called junk bonds). Lower credit rating, higher risk,
higher returns.

A certified financial planner in Buffalo, New York, stocks and bonds have
distinct roles that may produce the best results when they're used as a
complement to each other.
"As a general rule of thumb, I believe that investors seeking a higher return
should do so by investing in more equities, as opposed to purchasing
riskier fixed-income investments," Koeppel says. "The primary role of fixed
income in a portfolio is to diversify from stocks and preserve capital, not to
achieve the highest returns possible."
There are many adages to help you determine how to allocate stocks and
bonds in your portfolio. One says that the percentage of stocks in your
portfolio should be equal to 100 minus your age. So, if you’re 30, your
portfolio should contain 70% stocks, 30% bonds (or other safe investments).
If you’re 60, it should be 40% stocks, 60% bonds.
The core idea here makes sense: As you approach retirement age, you can
protect your nest egg from wild market swings by allocating more of your
funds to bonds and less to stocks.

14. Dividend stocks are often issued by large, stable companies that
regularly generate high profits. Instead of investing these profits in
growth, they often distribute them among shareholders — this
distribution is a dividend. Because these companies typically aren’t
targeting aggressive growth, their stock price may not rise as high or
as quickly as smaller companies, but the consistent dividend payouts
can be valuable to investors looking to diversify their fixed-income
assets.

15. Preferred stock resembles bonds even more, and is considered a

fixed-income investment that's generally riskier than bonds, but less
risky than common stock. Preferred stocks pay out dividends that are
often higher than both the dividends from common stock and the
interest payments from bonds.

16.Selling bonds
Bonds can also be sold on the market for capital gains if their value
increases higher than what you paid for them. This could happen due to
changes in interest rates, an improved rating from the credit agencies or a
combination of these.
However, seeking high returns from risky bonds often defeats the purpose
of investing in bonds in the first place — to diversify away from equities,
preserve capital and provide a cushion for swift market drops.

17.Commodity
 A commodity is a basic good used in commerce that is
interchangeable with other commodities of the same type.
 Commodities are most often used as inputs in the production of
other goods or services.
 Investors and traders can buy and sell commodities directly in the
spot (cash) market or via derivatives such as futures and options.
 Hard commodities refer to energy and metals products while soft
commodities are often agricultural goods.
 Owning commodities in a broader portfolio is encouraged as a hedge
against inflation.
 A commodity thus usually refers to a raw material used to
manufacture finished goods. A product, on the other hand, is the
finished good sold to consumers.

18. Commodity futures

 A commodity futures contract is a standardized contract that obliges

the buyer to purchase some underlying commodity (or the seller to
sell it) at a predetermined future price and date.
 Commodity futures can be used to hedge or protect a position in
commodities.
 A futures contract also allows one to speculate on the direction of a
commodity, taking either a long or short position, using leverage.
 The high degree of leverage used with commodity futures can
amplify gains, as well as losses.
 Many investors confuse futures contracts with options contracts.
With futures contracts, the holder has an obligation to act. Unless
the holder unwinds the futures contract before expiration, they must
either buy or sell the underlying asset at the stated price.

19. Capital gain is an economic concept defined as the profit earned on the sale of
an asset which has increased in value over the holding period. An asset may
include tangible property, a car, a business, or intangible property such as
shares.

20. Royalty

 A royalty is an amount paid by a third party to an owner of a product

or patent for the use of that product or patent.
 The terms of royalty payments are laid out in a licensing agreement.
  The royalty rate or the amount of the royalty is typically a percentage
based on factors such as the exclusivity of rights, technology, and
the available alternatives.
 Royalty agreements should benefit both the licensor (the person
receiving the royalty) and the licensee (the person paying the
royalty).
 Investments in royalties can provide a steady income and are
considered less risky than traditional stocks.
 An example of royalties would be payments received by musicians
when their original songs are played on the radio or television, used
in movies, performed at concerts, bars, and restaurants, or
consumed via streaming services.
 Royalty payments typically constitute a percentage of the gross or
net revenues obtained from the use of property. However, they can
be negotiated on a case-by-case basis in accordance with the
wishes of both parties involved in the transaction. There is also
payment per unit.
 factors that can affect royalty rates include the exclusivity of rights,
available alternatives, risks involved, market demand, and
innovation levels of the products in question.
 Type of Royalty: nonrenewable resource royalties, patent royalties,
trademark royalties, franchises, copyrighted materials, book
publishing royalties, music royalties, and art royalties. Well-known
fashion designers can charge royalties to other companies for the
use of their names and designs.

21. Residual income refers to the money you have after you've taken care of
ongoing expenses like your mortgage, credit card bills, utilities, groceries and
car payments. This extra money can go toward things like investments, debt
payoffs, savings or even a vacation fund.

Difference btw Passive and residual income: Passive income is money earned
from an enterprise with little or no ongoing effort. Residual income is not
exactly a type of income but a calculation determining how much
discretionary money an individual or entity can spend after paying their
bills and meeting their financial obligations.
22. Debt consolidation is the act of combining several loans or liabilities into one by taking
out a new loan to pay off the debts.
23. A credit card minimum payment is the lowest amount you can pay every month
while keeping your account in good standing. Making at least the minimum
payment on your credit cards every billing cycle ensures that you do not get stuck
with late fees, penalty APRs or derogatory marks on your credit report.

REAL ESTATE
1. Depreciating a property means deducting the cost of buying or renovating a
rental property over a period of time rather than all at once. Depreciating the
property means you deduct the cost over its useful life.

2. Appreciation is the rise in the value of an asset, such as currency or real estate.
It's the opposite of depreciation, which reduces the value of an asset over its useful
life. Increases in value can be attributed to interest rate changes, supply and demand
changes, or various other reasons.

3. An “I owe you” (IOU) is a document that records the existence of a debt. It is

typically considered an informal agreement and is less likely to be legally
binding than a formal contract.

4. A Lease-Purchase Contract, also known as a lease purchase agreement or rent-to-

own agreement, allows consumers to obtain durable goods[1] or rent-to-own real
estate[2] without entering into a standard credit contract.[1] It is a shortened name for
a lease with option to purchase contract. For real estate, a lease purchase contract
combines elements of a traditional rental agreement with an exclusive right of first
refusal option for later purchase of the home
 5. Rent-to-own property - it doesn’t require the hefty down payment associated
with buying a house outright.The scheme works through a lease agreement that
gives you the option to end with a sale – or, to put it more simply, you can try a
property before you buy!

6. Investment property is land or a building (including part of a

building) or both that is:

 held to earn rentals or for capital appreciation or both;

 not owner-occupied;
 not used in production or supply of goods and services, or for
administration; and
 not held for sale in the ordinary course of business.

Investment property may include investment property that is being

redeveloped.

7.

In a nutshell, those looking to buy a property enter into a lease – that is, a contract between
the developer and the potential buyer – that dictates a certain length of time during which the
buyer will first rent the home.

For some people, this might be five years, and for others it could be 20. At the end of this
contract, you can exercise the option to purchase the property

6) Ask these question when looking for property:

Is it an investment property？If yes then continue ask: Is it rented? What is the current rent?
What is the vacancy rate? What are the average rents in that area? What are the
maintenance costs? Is there deferred maintenance? Will the owner finance? What type of
financing terms are available?

STOCKS
1. Liquidate stocks - To liquidate means to sell an asset for cash. Investors may choose
to liquidate an investment for a variety of reasons, including needing the cash,
wanting to get out of a weak investment, or consolidating portfolio holdings.
 2. retail investor, also known as an individual investor, is a non-professional investor
who buys and sells securities or funds that contain a basket of securities such
as mutual funds and exchange traded funds (ETFs).

3. Dollar-cost averaging involves investing the same amount of money in a target

security at regular intervals over a certain period of time, regardless of price.
Dollar-cost averaging is a good strategy for investors with lower risk
tolerance since putting a lump sum of money into the market all at once can run the
risk of buying at a peak, which can be unsettling if prices fall. Value averaging aims
to invest more when the share price falls and less when the share price rises.

4. 做空（Short sale），是一个投资术语，是金融资产的一种操作模式。 与做多相对，做

空是先借入标的资产，然后卖出获得现金，过一段时间之后，再支出现金买入标的资
产归还。 做空是股票期货市场常见的一种操作方式，操作为预期股票期货市场会有下
跌趋势，操作者将手中筹码按市价卖出，等股票期货下跌之后再买入，赚取中间差价。

5. Investors take a systematic approach to growing their wealth, buying assets with
reasonable levels of risk in exchange for long-term growth. Speculators, on the other
hand, buy assets that may experience rapid growth but can also lose their entire
value if they go out of favor.

Company
1. S Corps vs. C Corps
https://www.fool.com/the-ascent/small-business/document-management/articles/s-corp-vs-c-corp/

ECONOMY
1. 4 Factors That Shape Market Trends
Trends are what allow traders and investors to capture profits.
Whether on a short- or long-term time frame, in an overall trending
market, or a rangebound environment, the flow from one price to
another is what creates profits and losses. There are four major
factors that cause both long-term trends and short-term fluctuations.
 These factors are government, international transactions,
speculation and expectation, and supply and demand.

https://www.investopedia.com/articles/trading/09/what-factors-create-trends.asp

2.