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key person insurance
Definition

Life insurance purchased by a company or investor on the life of a key executive. Usually the company is the policy’s beneficiary. also called business life insurance.

Junk Bond

A bond rated ‘BB’ or lower because of its high default risk.

Also known as a “high-yield bond” or “speculative bond”.

These are usually purchased for speculative purposes. Junk bonds typically offer interest rates three to four percentage points higher than safer government issues.

Job Openings and Labor Turnover Survey – JOLTS

A survey done by the United States Bureau of Labor Statistics to help measure job vacancies. It collects data from employers including retailers, manufacturers and different offices each month. Respondents to the survey answer quantitative and qualitative questions about their businesses’ employment, job openings, recruitment, hires and separations. The JOLTS data is published monthly and by region and industry.

JOLTS data has many uses, not least of which is to help guide the government in formulation of economic policy through economic research and planning. The JOLTS publications provide data that can help in the analysis of industry retention rates, business cycles and industry-specific economic research. Also, JOLTS has been used in conjunction with the Help-Wanted Index, which is published by the Conference Board, for a more accurate reading of job-market efficiency in the country.

Not too long ago we read in the local papers (Malaysia) that majority people lose money investing in Unit Trust. But things will start to change when the Deputy PM of Malaysia say otherwise in the New Straits Times today. Append is the featured news :

Put your money in unit trusts, says Najib
27 Mar 2007
Hamidah Atan

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PUTRAJAYA: With the economy growing steadily, this is the best time to invest in unit trusts, Deputy Prime Minister Datuk Seri Najib Razak said yesterday.

“It is an investment with minimum risk, and economic expansion and the good performance of companies will result in higher dividends for investors.

“I am not saying we should not invest in the share market because that is the individual’s decision, but for small-time players, it is better that they invest in unit trusts.”

Najib was speaking after laun- ching the Perbadanan Nasional Bhd (PNB) 2007 investment quiz at the Putrajaya Corporation complex here.

Also present were PNB chairman Tan Sri Ahmad Sarji Abdul Hamid and its president and chief executive officer, Tan Sri Hamad Kama Piah Che Othman.

Najib said the economy was getting stronger and more stable.

“Last year’s gross domestic product (GDP) increased to 5.9 per cent from 5.2 per cent the previous year.

“The country’s GDP is expected to remain firm at six per cent while the inflation rate is expected to go down to three per cent this year.”

The Kuala Lumpur Composite Index reached 1,283.47 points on Feb 23, its highest in 10 years.

“All this clearly shows how strong our economy is. We should grab the opportunity to strategise our financial planning so we will not be left behind in making a positive and meaningful investment.”

Najib also touched on the need for public awareness programmes to teach credit card holders how to manage their personal finances and not spend beyond their means.

In 2005, he said, 16,000 bankruptcy cases were filed, of which eight per cent were against those below the age of 30.

High-income earners who overspent with their credit cards could also land themselves in trouble.

“The more you educate the people, the better. Some of the financial institutions can also sponsor similar programmes.”

Najib said it was normal for banks or financial institutions to offer credit card facilities but it was up to the individual to use them wisely.

“Credit cards are like double-edged swords, like the Internet. It is a facility given but if we are not smart enough to use it, then it can become a burden to us.”

Initial Public Offering – IPO

The first sale of stock by a private company to the public. IPOs are often issued by smaller, younger companies seeking capital to expand, but can also be done by large privately-owned companies looking to become publicly traded.

In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), best offering price and time to bring it to market.

Also referred to as a “public offering”.

IPOs can be a risky investment. For the individual investor, it is tough to predict what the stock will do on its initial day of trading and in the near future since there is often little historical data with which to analyze the company. Also, most IPOs are of companies going through a transitory growth period, and they are therefore subject to additional uncertainty regarding their future value.

irrevocable
Definition

Not able to be undone.

Retirement Planning:

Inflation – the effect on savings

Bank and building society and other deposit-type investments may seem ’safe’ and they are, in as much as your capital is not exposed to the same risks which it’ll face from investing in something stockmarket-related. But looks can deceive! If you were receiving (say) 4% after tax from your savings account, but the annual rate of inflation was continually running at 5%, it’s true to say every year your savings would lose value.

Even a modest inflation rate can wreak havoc over time. Say you put $10,000 under the mattress and inflation is running at an annual rate of 2%. After 15 years, your money will have the purchasing power of just $7500. So, to protect the real value of your capital and the income it provides, you need to consider investments which can give you capital growth as well as income.

hurdle rate
The minimum rate needed for the return for a project

hedging
Syn: hedge :

Practice of offsetting the price risk inherent in any cash market position by taking an equal but opposite position in the futures market.

Other version:

hedge
Definition

An investment made in order to reduce the risk of adverse price movements in a security, by taking an offsetting position in a related security, such as an option or a short sale.