Advance Rate
Say you are going to get a loan. Unless you own the bank or are willing to pay loan-shark level interest, you are going to have to provide some collateral to back up that loan.
The advance rate relates the value of the collateral to the amount of the loan. It is given as a percentage, as in "Mr. Stantz, I understand you are putting up your parents' house to fund your ghost-hunting business. Your advance rate is 60%."
Think about a pawn shop: you take in your mom's wedding ring, hoping to get some cash. The wedding ring is going to be the collateral. The pawnbroker is going to bite the ring, make sure it's real gold and assess what it might be worth. It's valued at $500 and the advance rate is 80%. You are going to get $400 on that loan.
There are a number of factors that go into figuring out the advance rate. The biggest is the borrower's credit rating. There are also considerations related to the value of the collateral and the overall amount of the loan in question.
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Finance: What is the Relative Strength I...2 Views
finance a la shmoop what is the relative strength index as is the satisfaction
gained from a Saturday night date well everything is relative [man and woman kissing in car]
yeah all right when the same is true in stock market and generally speaking when
viewing any given stock its performance is mapped against the overall market and
for most Wall Streeters the overall market is defined as probably the S&P
500 more or less maybe the Dow may be Nasdaq but that's P 500 kind of what [man discussing S&P 500]
everyone uses so if the market or the S&P 500 was up 20% in a given period and
your stock was up only 10% well then sadly for you even though 10% in a short
period of time is a nice gain it was relatively meh [man gives thumbs up]
yeah its relative strength was meh not so great that's what man means by the
same token if the market was down 20% in that same period and your stock was down
only a 5% well then what squared for you your stock was relatively strong so [stock stamped relatively strong]
what's a good RSI or relative strength index and what's a bad one well every
stock is placed on a scale of 1 zero to a hundred and this scale measures a [RSI scale appears]
stock's recent trading strength if it goes over the 70ish mark well that means
it's moving up rapidly and it's probably overbought so it might make you nervous
if you pay attention to charts and crystal balls when you pick your stocks [girl biting her nails]
well if the thing drops below 30 ish in the same way well then it's likely
oversold maybe you should buy some yeah go go buy some Sears or a big-box [man talking outside Sears]
retailer yeah how about that yeah so there's a reason these things
exist only in a vacuum and and don't help real stock pickers necessarily dot
out their portfolio well in either case overbought or oversold the most likely
scenario is that there's gonna be a return to the mean or a regression to
the mean in the immediate future least if you believe the RSI Index thing you
hear working and yeah you want to know that a stock you own is reliably [stock working out in a gym]
steadily strong and maybe not all over the place in extreme hills and valleys
are great on a ski vacation investing in the stock market well not so much but if [man skis off a slope]
you're gonna do that well get used to the hills they don't go
way
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