Today we have two Terms both of which bring Great Cheer to the faces of Investors ! :). Have a Great day.
Term of the Day

Return on equity (ROE)

Ratio measuring stockholders' (shareholders') profitability, expressed as a percentage of the firm's net worth. ROE indicates a firm's efficiency in applying common-stockholders' (ordinary-shareholders') moneyFormula:Net income divided by Net worth.
Learn more about this term
Usage Example
Return on equity is one of the best ways to measure a corporation's profitability as it shows how much profit is generated with the money that shareholders invest.
Investor Word of the Day
Term of the Day

Intrinsic value

  1. The actual value of a security, as opposed to its market price or book value. The intrinsic value includes other variables such as brand name,trademarks, and copyrights that are often dificult to calculate and sometimes not accurately reflected in the market price. One way to look at it is that the market capitalization is the price (i.e. what investors are willing to pay for thecompany) and intrinsic value is the value (i.e. what thecompany is reallyworth). Different investors use different techniques to calculate intrinsic value.
  2. The amount by which a call option is in the money, calculated by taking the difference between the strike price and the market price of the underlier. For example, if a call option for 100 shares has a strike price of $35 and the stockis trading at $50 a share than the call option has an intrinsic value of $15share, or $1500. If the stock price is less than the strike price the call option has no intrinsic value.
  3. The amount by which a put option is in the money, calculated by taking the difference between the strike price and the market price of the underlier. For example, if a put option for 100 shares has a strike price of $35 and the stockis trading at $20 a share than the put option has an intrinsic value of $15 pershare, or $1500. If the stock price is greater than the strike price the put option has no intrinsic value.
Learn more about this term
Usage Example
To fully take into account the actual value of a security it is best to look at theintrinsic value as it looks beyond just the market price.