Supporters of efficient market theory hold a similar belief that market performance can't be predicted, and both schools of thought stand in opposition to technical analysis, which predicts future stock prices based on statistical patterns of prior performance.

These rating services also evaluate insurance companies, including those offering fixed annuities, in terms of how likely a provider is to meet its financial obligations to policyholders.

There are three types of REITs: Equity REITs buy properties that produce income. Mortgage REITs invest in real estate loans. Hybrid REITs usually make both types of investments. All three are income-producing investments, and most of a REIT's annual income is distributed to investors. That means the yields on REITs are often higher than on other equity investments.

Finding your real rate of return, however, is generally a calculation you have to do on your own. It isn't provided in annual reports, prospectuses, or other publications that report investment performance.

REAL RATE OF RETURN
	Earned interest rate
	Inflation rate
=	Real rate of return
10%   3%   = 7%

Traditionally, this type of information was available to the public with a 15-minute time delay or was reported only periodically by news services. With the increasing popularity of the Internet and cable TV, however, more and more individual investors have access to real-time financial news. Knowing what's happening enables you and others to make buy and sell decisions based on the same information that institutional investors and financial services organizations are using.

Realizing your gains means you lock in any increase in value, which could potentially disappear if you continued to hold the investment. But it also means you owe tax on that profit unless the investment is tax-exempt or you hold it in a tax-deferred account when you sell. In the latter case, you can postpone paying the tax until you begin withdrawing from the account.

However, if taxes are due and you have owned the investment for a year or more when you sell, you pay tax at the long-term capital gains rate, which is always lower than the rate at which you pay federal income tax.

A negative form of recapture occurs when the government makes you repay tax benefits that you've profited from in the past. For example, say that your divorce settlement calls for you to pay $150,000 to your ex-spouse over three years. If you pay all of the money in the first two years in order to qualify for a tax deduction, and pay nothing in the third year, the IRS may force you to recapture part of your deduction in the third year and pay taxes on it.

Any shares bought between the record date and the day on which the dividend is paid are ex-dividend, which means those new owners will get no dividend for the period.

Although the preliminary prospectus contains important information about the company, its offerings, financial projections, and investment risk, it is frequently revised before the final version is issued.

You can redeem, or liquidate, mutual fund shares at any time. The fund buys them back at their net asset value (NAV), which is the dollar value of one share in the fund. In order to discourage quick shifting of assets among mutual funds, many funds charge a redemption fee if you take your money out of the fund within a limited period after you invest.

The purpose of the fee is to prevent large-scale withdrawals from the fund in response to changes in the financial markets, which might require the fund manager to sell holdings at a loss in order to meet the fund's obligation to buy back your shares.

Or, you may refinance by coming to an agreement with your lender to change the amount of each payment or the payment schedule, especially if you find yourself unable to keep up with your payments. Unlike taking a new loan at a lower rate, which may save you money, changing the repayment arrangement is likely to cost you more in interest. On the other hand, it may be the best way to avoid defaulting on the loan.

When a bond issuer refinances a bond because interest rates have dropped, the issuer floats a new bond issue and calls, or pays off, bonds that had been issued at higher rates. While the issuer faces certain transaction expenses, as you do when you pay off one mortgage and take a new one, there can be significant long-term savings in paying bondholders the lower rate.

Using the Intermarket Trading System (ITS), specialists on one exchange can execute a trade on any other exchange if the price there is better than the price on the exchange where the specialist is located. There are currently eight such exchanges, with offices in nine cities, including Boston, Chicago, Los Angeles, Philadelphia, and San Francisco.

Currently, however, bonds are increasingly registered electronically, so there are no certificates to endorse. Instead, you authorize the transaction over the phone or by computer.

Only a small percentage of all investment advisors register. And while the designation doesn't mean that the SEC vouches for their effectiveness, being registered is often interpreted as a sign that the advisor meets a higher standard.

This unpredictability is known as reinvestment risk. For example, if a bond paying 10% interest matures when the current rate is 5%, you must settle for a lower return if you buy a new bond or choose some other type of investment.

One way to limit reinvestment risk is by using an investment technique known as laddering, which means splitting your investment among a number of bonds (or CDs) with different maturity dates. That way only part of your total investment will mature and have to be reinvested at any one time.

The required percentage, which is revised periodically, is a key factor in determining how much money a bank can lend. It therefore affects the rate of economic growth. When the reserve requirement is raised, banks have less cash to lend, and the economic growth rate slows.

If the company has not yet registered with the Securities and Exchange Commission (SEC) for an initial public offering (IPO), its securities cannot be transferred or resold until the issuing company meets the SEC registration requirements for publicly traded securities. Or, if you exercise stock options and buy stock at a reduced price, you may be required to hold those stocks for a period of time before liquidating them.

For example, if you bought a stock at $25 a share and sold it for $30 a share, your return would be $5. If you bought on January 3, and sold it the following January 3, that would be a 20% annual percentage return, or the $5 return divided by your $25 investment. But if you held the stock for five years before selling for $30 a share, your annual return would be 4%, because the 20% gain is divided by five years rather than one year.

In general, it's considered a sign of good management when a company's performance over time is at least as good as the average return on equity for other companies in the same industry.

RETURN ON INVESTMENT
=	$7,500		(Current value)
	5,000		(Investment amount)
=	$2,500		(Profit)
÷	5,000		(Investment amount)
=	50	%	(Percentage return)
÷	2		(Years investment held)
=	25	%	Annual percentage return (return on investment)

When corporations release their financial statements, those that provide services, such as power or telecommunications companies, describe their income as revenues, while those that manufacture products, such as lightbulbs or books, describe their income as sales.

In either case, they're reporting the amount they take in before expenses, taxes and other charges are subtracted. The money a government collects in taxes is also called revenue, and in the US the department that collects those taxes is called the Internal Revenue Service (IRS).

For example, a 1-for-2 reverse stock split halves the number of existing shares and doubles the price. In that case, if you hold 100 shares of a stock selling at $5 a share, for a combined value of $500, in a 1-for-2 reverse stock split, you would own 50 shares valued at $10 a share, which would still give you a combined value of $500.

Stocks may be reverse split 1-for-5, or 5-for-10, or in any ratio the company chooses. Reverse splits are generally used to discourage small investors or to encourage institutional investors, who may not buy stocks priced below a specific point.

To act on the offering, you turn over the rights you receive (typically one for each share of stock you own) and the money needed to make the purchase within the required period, often two to four weeks.

You don't have to buy the additional shares, and you can transfer your rights to someone else if you prefer. But buying helps you maintain the same percentage of ownership you had in the company before the new shares were issued rather than having that percentage diluted.

As a rule of thumb, if you are unwilling to take some investment risk, you are likely to limit your investment reward. For example, if you put your money into an insured bank deposit, which protects your principal, your real rate of return is unlikely to exceed inflation.

Other measures of risk premium, which are applied specifically to stocks, are a stock's beta, or the volatility of that stock in relation to the stock market as a whole, and a stock's alpha, which is based on an evaluation of the stock's intrinsic value.

Similarly, the higher interest rates that bond issuers typically offer on riskier bonds may be considered a risk premium, since the higher rate, and potentially greater return, is a way to compensate for the greater risk.

One method is to investigate the investment's price volatility over various periods of time, including different market environments. For example, you might consider how far the price fell in the most recent bear market against its price in a bull market, or how it performed in a recent market correction. In general, the greater the volatility, the greater the risk.

However, many analysts believe that looking exclusively at past performance can be deceptive in evaluating the risk you are taking in making a certain investment, since it can't predict what will happen in the future.

Your yield, or the amount you earn on that investment, is described as risk-free return. By subtracting the risk-free return from the return on an investment that has the potential to lose value, you can figure out the risk premium, which is one measure of the risk of choosing an investment other than the 13-week bill.

Similarly, when a bond or certificate of deposit (CD) matures, you can roll over the assets into another bond or time deposit. In the same vein, if you move money from a qualified retirement plan into an IRA, you create an IRA rollover.

You may also be able to withdraw money earlier without penalty if you qualify for certain exceptions, such as using up to $10,000 toward the purchase of a first home. And since a Roth IRA has no required withdrawals, you can continue to accumulate tax-free earnings as long as you like. You can make a nondeductible contribution of up to $2,000 any year you have earned income, even after age 70 1/2, though you can never contribute more than you earn.

To contribute to a Roth IRA, your modified adjusted gross income (AGI) must be less than the annual limit set by Congress. You can make a full contribution with a modified AGI of up to $95,000 if you're single, and up to $150,000 if you are married and file a joint return.

You may make partial contributions on a sliding scale if your AGI is between $95,001 and $110,000 if you're single, and between $150,001 and $160,000 if you're married. You may also qualify to convert a traditional IRA to a Roth IRA if your modified AGI in the year you convert is less than the cap, currently $100,000, which applies whether you are single or married.

Its illegal to calculate loans with terms longer than 61 months using the rule of 78 and a number of states outlaw the practice for all loans. But where the rule of 78 is used, the loans may be described as precomputed or precalculated loans, or as loans that offer a rebate of finance charge if you prepay.