Author: user

What is time value? Time value is the portion of an option’s premium that reflects the amount of time remaining until the contract expires and the market’s expectation of future price movement. An option’s premium equals intrinsic value plus extrinsic value; time value is the extrinsic portion that declines as expiration approaches. Key takeaways Time…

Understanding Time Series: Analyzing Data Trends Over Time A time series is a chronological sequence of data points measured at regular intervals. It is a fundamental tool for identifying trends, seasonality, cycles, and other temporal patterns in fields such as finance, economics, climatology, and demographics. Key takeaways A time series records observations of the same…

Times Interest Earned (TIE) Ratio What it is The times interest earned (TIE) ratio is a solvency metric that measures a company’s ability to meet interest payments on its debt using operating earnings. It shows how many times earnings before interest and taxes (EBIT) cover the company’s interest expense. Formula TIE = EBIT ÷ Interest…

Time in Force: Trading Order Durations and Types Time in force (TIF) is an instruction attached to a trade that specifies how long the order remains active before it is executed or expires. It gives traders control over timing and duration, helping prevent unintended executions—especially important in volatile markets. Key takeaways Time in force determines…

Understanding Investment Time Horizons An investment time horizon is the period you plan to hold an investment to meet a specific financial goal. It shapes what types of assets you choose, how much risk you accept, and how you balance liquidity, growth, and capital preservation. Aligning your portfolio with the appropriate time horizon helps manage…

Time Deposit (Term Deposit) What is a time deposit? A time deposit (also called a term deposit) is a bank account that locks in funds for a set period in exchange for a predetermined interest rate. Certificates of deposit (CDs) are the most common form. To earn the stated rate, the funds must remain in…

Understanding Time Decay in Options Time decay, commonly called theta, is the decline in an option’s value as its expiration date approaches. Because options have a limited lifetime, the portion of their premium attributable to time — the time value or extrinsic value — decreases over time. This process is continuous and irreversible: once time…

Timber Investment Management Organization (TIMO): Overview Key takeaways * A TIMO (Timber Investment Management Organization) manages timberland investments on behalf of institutional investors. * TIMOs source, acquire, and actively manage timber properties to generate financial returns. * Timberland can offer portfolio diversification, inflation protection, low correlation with stocks and bonds, and potential land appreciation —…

Tight Monetary Policy What it is Tight (contractionary) monetary policy is a set of central bank actions designed to slow an overheating economy or curb rising inflation. The goal is to reduce aggregate demand by making credit more expensive and shrinking the money supply. How it works Central banks tighten policy primarily by raising short-term…

Understanding Tier 2 Capital: Definition and Key Takeaways Key takeaways * Tier 2 capital is a bank’s supplementary capital, used alongside Tier 1 (core) capital to meet regulatory capital requirements. * It includes revaluation reserves, general provisions, hybrid instruments, and subordinated debt. * Total regulatory capital is expressed as a ratio to risk-weighted assets (RWA);…

Tier 1 Leverage Ratio: Definition, Formula, and Key Points Key takeaways * The Tier 1 leverage ratio compares a bank’s Tier 1 capital to its total consolidated assets to assess leverage and near‑term financial resilience. * Formula: Tier 1 Leverage Ratio = (Tier 1 Capital / Consolidated Assets) × 100. * Regulators generally view a…

Tier 1 Common Capital Ratio — Meaning and Overview The Tier 1 common capital ratio measures a bank’s core common equity relative to its total risk-weighted assets. It indicates how well a bank can absorb losses and remain solvent under stress. Regulators and investors use this ratio to assess capital adequacy and to determine whether…

Tier 1 Capital Ratio What it is The Tier 1 capital ratio measures a bank’s core financial strength by comparing its highest-quality capital to its risk-weighted assets. Regulators use it to assess whether a bank has enough capital to absorb losses and remain solvent during stress. Tier 1 capital — what’s included Tier 1 (core)…

Tier 1 Capital What is Tier 1 Capital? Tier 1 capital is a bank’s core capital used to absorb losses and support ongoing operations. It primarily consists of high-quality equity instruments and disclosed reserves that regulators treat as the first line of defense against insolvency. Key components: * Common Equity Tier 1 (CET1): common shares,…

Ticker Symbol Definition A ticker symbol (or stock symbol) is a short arrangement of letters used to uniquely identify a publicly traded security on an exchange. Symbols typically range from one to five characters and are used by investors, traders, and financial platforms to find, quote, and execute trades for specific securities. Why ticker symbols…

Tick Size: Definition and Key Takeaways Tick size is the minimum price increment by which the quoted price of a trading instrument can change. It varies by asset class and exchange and influences liquidity, bid-ask spreads, and trading costs. Key takeaways: * Tick size = smallest allowed price movement for an instrument. * Most U.S….

Key Takeaways * A tick is the smallest incremental price movement a security can make on an exchange. * Since decimalization, most U.S. stocks trading above $1 move in one-cent ticks ($0.01). * Tick sizes vary by market and instrument (e.g., E‑mini S&P 500: $0.25; gold futures: $0.10). * A 2016–2018 SEC tick size pilot…

Throughput: Definition, Formula, and How to Improve It What is throughput? Throughput is the quantity of a good or service a company can produce and deliver within a specified time period. It describes the production or processing rate and is used to assess operational efficiency and revenue potential. Note: throughput typically counts only units that…

Thrift Savings Plan (TSP): What It Is and How It Works The Thrift Savings Plan (TSP) is the defined-contribution retirement plan for federal employees and uniformed service members. It functions similarly to a private-sector 401(k), offering tax-advantaged contribution options, employer matching for many federal employees, low-cost index funds, and rollover flexibility. Key takeaways TSP is…

Thrift Bank: Definition, History, How It Works, and Impact Key takeaways * A thrift bank (or Savings and Loan Association, S&L, or “thrift”) is a depository institution focused on consumer savings and residential mortgage lending. * Thrifts typically offer higher savings yields and concentrate on home loans, though many also provide checking, personal and auto…

Thrift Associations: What They Are and How They Work What is a thrift? A thrift (often called a savings and loan association) is a depository institution that historically focused on taking deposits and making home mortgages. The term is sometimes used broadly to include mutual savings banks and credit unions that provide similar savings and…

Three White Soldiers: A Bullish Trading Pattern Guide The “three white soldiers” is a candlestick pattern used to identify a potential bullish reversal after a downtrend. It consists of three consecutive long-bodied bullish candles that open within the prior candle’s real body and close at or near each session’s high, signaling sustained buying pressure. Key…

Three-Sigma Limits What is a three‑sigma limit? A three‑sigma limit defines the range of values within three standard deviations (σ) of a process mean. For a normally distributed process, about 99.73% of observations lie within ±3σ of the mean. Three‑sigma limits are commonly used as upper and lower control limits on control charts to judge…

Three Black Crows: Bearish Candlestick Pattern for Trend Reversals Three Black Crows is a bearish candlestick pattern that signals a potential reversal of an uptrend. It consists of three consecutive long-bodied bearish candles that open within the previous candle’s real body and close progressively lower, indicating sustained selling pressure across three trading periods. Key takeaways…

Thomas Malthus Thomas Robert Malthus (1766–1834) was a British economist and cleric best known for his theory that population growth tends to outpace food production, a view set out in his 1798 work An Essay on the Principle of Population. He also developed a simple mathematical model of population growth—now called the Malthusian growth model—and…

Third World — Meaning and Modern Classifications Key takeaways “Third World” is an outdated Cold War term that originally described countries not aligned with either Western (capitalist) or Soviet (communist) blocs. Today the phrase is generally avoided as imprecise and potentially derogatory; preferred terms include developing, low- and middle-income (LMIC), frontier, and least developed countries…

Third-Party Transaction — Definition and Overview A third-party transaction is a business deal that involves an additional, independent party beyond the primary buyer and seller. That third party is not affiliated with the buyer or seller and can play a variety of roles: intermediary, facilitator, payment processor, or service provider. In practice, third-party involvement can…

Third-Party Liability Insurance What it is Third-party liability insurance protects the policyholder (the first party) from financial claims made by another person or business (the third party). The insurer (the second party) pays covered damages and defense costs up to the policy limits when the insured’s actions cause injury or property damage to others. A…

Understanding Third Parties A third party is an entity involved in a transaction or business relationship that is not one of the principal parties. Third parties typically act as neutral participants or service providers to facilitate transactions, reduce risk, and handle specialized functions that the primary parties do not perform themselves. Key takeaways A third…

Theta: What It Means in Options Trading What is theta? Theta (θ) is the options “Greek” that measures time decay — the rate at which an option’s value erodes as it approaches expiration. It is commonly quoted as the amount an option’s price will change per day, all else equal. How theta is expressed For…

There Ain’t No Such Thing as a Free Lunch (TANSTAAFL) “There ain’t no such thing as a free lunch” (TANSTAAFL) expresses a simple economic truth: every choice carries a cost. What appears free usually embeds direct or indirect costs—paid by someone, shifted elsewhere, or realized as missed opportunities. Understanding TANSTAAFL helps consumers, investors, and policymakers…

Theory of the Firm What it is In neoclassical microeconomics, the theory of the firm explains why firms exist and how they make decisions. The central assumption is that firms act to maximize profit — the difference between total revenue and total cost. This framework guides analyses of production, pricing, and market structure. How it…

Understanding the Theory of Price: Supply, Demand, and Market Equilibrium Key takeaways The theory of price explains how prices are determined by the interaction of supply and demand in a market economy. Market equilibrium occurs when the quantity supplied equals the quantity demanded; the corresponding price is the clearing price. Prices adjust when supply or…

Theoretical Value (of a Right) The theoretical value of a right is the estimated intrinsic value of a subscription right issued in a rights offering. It helps investors understand the discount or premium of shares with attached rights during the offering period and guides decisions about exercising, selling, or letting rights lapse. Key concepts Rights…

Theoretical Ex-Rights Price (TERP) A theoretical ex-rights price (TERP) is the estimated market price of a share immediately after a company completes a rights offering. Rights offerings allow existing shareholders to buy additional shares, typically at a discount, increasing the number of shares outstanding and causing dilution. TERP expresses the new share value after taking…