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 motivated by human behavior. It encompasses both traditional data sources such as company…
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…
Interest Rate Risk Explained With Relevant Examples
Interest is basically a reward paid by a borrower for the use of an asset, usually capital, belonging to a lender. It’s the compensation paid for the loss of use of the asset. We could also describe it as the…
Time Value of Money Explained With Relevant Examples
Time value of money is a concept that refers to the greater benefit of receiving a given amount of money at present rather than in the future due to its earning potential. For example, money could be invested in a…
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…
Measurement Bases – Assets and Liabilities
Financial assets are measured and reported either at fair value or amortized cost. IFRS defines fair value as the amount at which an asset could be exchanged or a liability settled in an arm’s length transaction between knowledgeable and willing…
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…
