What's a "pairs trade"? - R.K., Fairfield, Calif.
It's the practice of making two related trades at the same time. One is a "long" position (i.e., buying a stock with the expectation that it will increase in value) and the other a "short" position (where you sell a stock you expect will fall, planning to buy it back later at a lower price).
The two securities will have a strong relation to each other.
For example, when the price of oil recently began falling, some people expected gold to rise. If so, they may have done some pairs trading, buying gold-related securities and shorting oil-related ones.
What's a company's "burn rate"? - W.G., Decatur, Ill.
It refers to how quickly the company is burning through cash. This isn't often an issue for large, established companies, but with small and quickly growing ones, a glance at the burn rate can be valuable. The number to examine is free cash flow, which is income from operations, less capital expenditures.