Identifying the Type of Market Structures
Monopoly markets and situations where companies hold significant pricing power can result in market inefficiencies, as the monopolies tend to constrain output in order to sell at higher prices. Due to this, many countries have a competition law that regulates…
Oligopoly Competition
What Is Oligopoly Competition? An oligopoly is a market structure in which a small number of large firms dominate an industry. Because only a few firms compete, each company’s pricing and production decisions directly influence its competitors, making strategic decision-making…
Monopolistic Competition
What Is Monopolistic Competition? Monopolistic competition is a market structure in which many firms sell similar but differentiated products. Because products are not identical, firms have some ability to influence prices through branding, quality, customer service or product features. Examples…
Characteristics of Market Structures
What Are Market Structures? Market structures describe the competitive environment in which firms operate. They determine how prices are set, how much competition exists and how easily new firms can enter or leave a market. In economics, market structures are…
Breakeven Analysis
What Is Breakeven Analysis? Breakeven analysis helps determine the level of output or sales at which a firm’s total revenue equals its total cost. At the breakeven point, economic profit is zero because the firm earns just enough revenue to…
Yield Spread Measures for Money Market Instruments
Money market instruments are short-term debt securities with original maturities of one year or less. They are a crucial part of the financial market and include a variety of instruments such as overnight sale and repurchase agreements (repos), bank certificates…
Yield Spread Measures for Floating-rate Instruments
Floating Rate Instruments Floating-rate instruments, such as floating-rate notes (FRNs) and most loans, differ from fixed-rate bonds in their periodic payment dynamics. Their interest payments fluctuate based on a reference interest rate, ensuring the borrower’s base rate remains aligned with…
Issuance and Trading of Government and Corporate Fixed-income Instruments
Sovereign vs. Corporate Debt Issuance Process There is a clear distinction between corporate and sovereign debt issuance processes. Corporate debt issuance tends to be opportunistic and is managed by investment bank underwriters on behalf of the issuers. On the other…
Funding Choices: Sovereign & Non-sovereign Governments, Quasi-government Entities, and Supranational Agencies
National or Sovereign Government Issuers National governments possess the sovereign authority to derive tax cash flows from economic activities within their jurisdiction. In contrast, private sector issuers depend on operating cash flows and alternative repayment sources, such as asset sales,…
Long-term Corporate Debt: Investment-grade (IG) Vs. High-yield (HY) Bonds
Corporate issuers use long-term debt to secure stable funding for a range of requirements, from short-term operations to long-term capital investments. However, the features and availability of such funding vary based on the credit quality of the issuer. While IG…
