Compare, Calculate, and Interpret Yield Spread Measures

Introduction Yield spread (measured in basis points) is the difference between any two bond issues and is computed as follows: Yield spread = yield on Bond 1 – yield on Bond 2 When the second bond is a benchmark (i.e….

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Describe Structured Financial Instruments

Introduction Structured financial instruments comprise a range of products designed to repackage and redistribute risk. They are pre-packaged investments based on a single security, a basket of securities, options, commodities, debt issuance or foreign currencies, and to a lesser extent, derivatives. They include asset-backed…

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Dividend Payment Chronology

Dividend chronology describes the timeline for a series of events that take place after a company decides to pay dividends to its shareholders. Included in this chronology are the declaration date, ex-dividend date, record date, and payment date, in that…

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Dividends, Stock Splits, and Share Repurchases

According to the dividend discount model (DDM), the value of an investment should be equal to the present value of the expected future benefits. For common shares, these benefits come in the form of dividends and the expected capital gain…

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Calculate and Interpret the Sharpe Ratio, Treynor Ratio, M2, and Jensen’s Alpha

There are four ratios commonly used in performance evaluation: Sharpe Ratio The Sharpe Ratio is defined as the portfolio risk premium divided by the portfolio risk: $$ Sharpe \quad ratio = \frac{ R_p – R_f } { σ_p } $$…

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Financial Applications of Distributed Ledger Technology

A distributed ledger is a database held and updated independently by each participant (or node) in a large network. Rather than have a central authority, records are independently constructed and held by every node (computer). Each node has the ability…

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Fintech Applications to Investment Management

Fintech has had a huge impact on investment management. The ability to create computer programs that can learn on their own and improve over time creates new opportunities for investment professionals across the board. Applications of Fintech in the Investment…

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Describe Big Data, Artificial Intelligence, and Machine Learning

Introduction Big data is a term used to refer to complex, extremely large data that may be analyzed computationally to reveal patterns, trends, and associations, especially those leading to human behavior. It encompasses both traditional data sources such as company reports,…

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Describe “Fintech”

Introduction Since computers whirred into life in the early 1960s, the world has witnessed unprecedented innovation and transformation in almost every aspect of life. Tasks that could only be performed by humans just over 20 years ago have now been…

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Analyze and Compare the Financial Statements of Companies

Introduction A company’s choice of inventory valuation method can have a significant impact on the presentation of its financial statements. Financial items such as cost of sales, gross profit, net income, inventories, current assets, and total assets as well as…

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