Trading Basics
Bid-Ask Spread
The difference between the price the trader and buy at and the price they can sell at.
Also bid-offer spread. The wider the spread, the more the trader pays, reactively.
Other Trading Basics
Backwardation
Backwardation occurs when a bid price exceeds the ask price.
This usually occurs when stock is suspended or under a share repurchase scheme.
It can also mean that a futures contract will trade at a higher price when it is coming close to expiring.
The opposite of backwardation is known as contango.
Commercial Paper
How big companies finance short-term cash flow.
Like bonds but without the coupon, instead, the APR is determined by the discount the agreements are entered into and the length of time to repayment.
For example, a blue chip company might borrow $9.95m dollars today and repay $10m in a month’s time.
Annual Report
The annual audited full year accounts of a particular company along with statements from the Chairman and Chief Executive.
Poured over by analysts for any gems.
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