Describe Structured Financial Instruments
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 securities…
Compare, Calculate, and Interpret Yield Spread Measures
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. Treasury),…
Describe “Fintech”
[vsw id=”ji2GmIdIvOY” source=”youtube” width=”611″ height=”344″ autoplay=”no”] Introduction Since computers whirred into life in the early 1960s, the world has witnessed unprecedented innovation and transformation in almost every sphere of life. Tasks that humans could only perform just over 20 years…
Describe Big Data, Artificial Intelligence, and Machine Learning
[vsw id=”ji2GmIdIvOY” source=”youtube” width=”611″ height=”344″ autoplay=”no”] 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 motivated by human behavior. It encompasses both…
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…
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…
Sharpe Ratio, Treynor Ratio, M2, and Jensen’s Alpha
The following are the four ratios commonly used in performance evaluation. Sharpe Ratio The Sharpe Ratio is the portfolio risk premium divided by the portfolio risk. $$ \text{Sharpe ratio} = \frac{ R_p – R_f } { \sigma_p } $$ The…
Components of Shareholders’ Equity
Shareholders’ equity represents the owners’ residual claim on a business entity’s assets after deducting its liabilities. This includes all funds that were directly invested in an entity by its owners, earnings that have been reinvested over time, and unrealized gains…
Current and Non-current Assets – Liabilities
The classified balance sheet distinguishes between current and non-current assets and between current and non-current liabilities. It classifies them separately. Current Assets vs. Non-current Assets Current assets are assets that are primarily held for trading or which are expected to…
