Market makers play a crucial role in price discovery in financial markets. By providing liquidity and maintaining a constant bid-ask spread, they help ensure that buyers and sellers can execute trades efficiently and at fair prices. The presence of...

Capital gains are profits realized from the sale of assets such as stocks, real estate, and other investments. The distinction between long-term and short-term capital gains is based on the holding period of the asset. Long-term capital gains are...

Maintenance margin refers to the minimum amount of equity that an investor must maintain in their margin account to avoid a margin call from their broker. The maintenance margin is typically set by the broker and is expressed as a percentage of the...

An uptick refers to a positive movement or increase in the value of a financial instrument, such as a stock, bond, or commodity, over a short period of time. It is a term commonly used in financial markets to describe the upward movement of prices....

Dividend payments play a significant role in generating passive income for investors by providing regular cash flow without the need to sell shares. Dividends are a portion of a company’s earnings distributed to shareholders, often every quarter,...

Traders, brokers, and market makers are all important players on the trading floor, each with their own unique roles and responsibilities. Traders are responsible for buying and selling financial instruments on behalf of their clients or their firms,...

Active management in stock trading refers to an investment strategy where the portfolio manager or trader actively makes decisions to buy, sell, or hold stocks in an attempt to outperform the overall market or a specific benchmark index. Unlike...

Primary and secondary stock exchanges serve distinct roles in the financial markets. A primary stock exchange is where securities are issued for the first time through Initial Public Offerings (IPOs). Companies raise capital by offering shares...

Market capitalization plays a significant role in determining the overall performance of stock markets or indices. It provides insights into the collective value of all the companies listed within a particular market or index. The total market...

Cumulative preferred stock is preferred equity that guarantees investors the right to receive any missed dividend payments before common stockholders receive their dividends. This feature protects investors in cases where the issuing company faces...