StickyKurtosis
Kurtosis refers to the measurement of the degree to which a given distribution is more or less ‘peaked’ relative to the normal distribution. The concept of kurtosis is very useful in decision-making. In this regard, we have 3 categories of…
Guidance of Standards
I. Professionalism Standard I is broad in scope and is directed toward competence within a small-business environment. This standard makes it clear that high ethical standards must apply even when an issue hasn’t been identified in writing. Standard I(A): Knowledge…
Older Curriculums
Study Session 1 Reading 1 (56 in 2022) – Ethics and Trust in the Investment Profession Read our in-depth summary of Ethics and Trust in the Investment Profession – LOS 1a: explain ethics – LOS 1b: describe the role of a…
Monopolistic Competition
Demand Analysis under Monopolistic Competition In monopolistic competition, firms have a downward-sloping demand curve, meaning lower prices lead to more demand and vice versa. At some prices, demand is very responsive to changes (elastic), and at lower prices, demand is…
Characteristics of Market Structures
Factors that Influence Market Structure. The number and relative magnitude of firms supplying a product. The extent of product differentiation. The seller’s power over pricing decisions. The strength of the barriers to entry and exit. The extent of non-price competition…
Legal, Regulatory, and Tax Implications on Fixed-income Securities
Fixed-income securities depend on laws and regulations of the place of issuance, where bonds are traded, and the holders of bonds. Classification of Bonds by Jurisdiction Domestic BondsThese are bonds issued by entities incorporated within a country and traded within…
Fixed-income Cash Flow Structures and Contingency Provisions
Fixed income instruments have different cash flow structures that provide investors and issuers with various options to meet their specific financial goals, manage risks, and tailor their investments to suit their particular circumstances. Standard, Fixed-Rate Bond (“Bullet Bond”) A standard…
Bond Indentures A bond indenture is a legal contract that outlines the obligations of the bond issuer and the rights of the bondholders. It’s often referred to as the bond indenture. This contract lays the groundwork for all subsequent transactions…
Features of a Fixed Income Security
Fixed-income securities encompass bonds and loans, serving as crucial avenues of debt financing for corporations and governments. These are formed under standardized agreements, where issuers obtain funds for operational or capital needs, and investors, in turn, lend their capital, expecting…
Minimum-Variance Portfolios
In theory, we could form a portfolio made up of all investable assets. However, this is not practical, and we must find a way to filter the investable universe. A risk-averse investor wants to find a combination of portfolio assets…
Uncorrelated Portfolio Holdings
The portfolio standard deviation, or risk, is not simply the addition of the risk of each portfolio holding. The interaction between portfolio holdings contributes to the overall portfolio risk. Correlation Correlation is a statistical measure of the relationship between two…
