Forward Spread
Definition: A forward spread is a type of options spread that involves selling one call option and buying one put option with the same strike price, but at different expiration dates. Structure: Sell one call option: This creates a credit spread, which generates premium. Buy one put option: This creates a debit spread, which costs […]
Payroll Tax
Payroll Tax Payroll tax is a type of tax levied on wages, salaries, and other income earned through employment. It is a mandatory tax imposed by governments on employers and employees. Types of Payroll Taxes: Income Tax: A tax on earned income, including wages, salaries, and overtime pay. The rate of income tax varies by […]
Passive Management
Passive Management Passive management is an investment strategy that involves mimicking the performance of a market index or a particular group of securities. Rather than actively selecting individual investments, passive managers use index funds or exchange-traded funds (ETFs) that track the performance of the market or index. Key Principles of Passive Management: Tracking: Passive managers […]
Merger
Definition: A merger is a business combination in which two or more companies consolidate their operations into a single entity, creating a new company. This is often achieved through a stock exchange or a transfer of ownership. Types of Mergers: Horizontal merger: Two companies in the same industry merge to create a larger competitor. Vertical […]
Beta Risk
Beta Risk Beta risk is a measure of the volatility of a security or portfolio. It quantifies the extent to which the security or portfolio’s returns move in synchronization with the returns of the overall market. Formula: Beta = Standard Deviation of Security Returns / Standard Deviation of Market Returns Interpretation: Beta greater than 1: […]
Sensitivity Analysis
Sensitivity Analysis Sensitivity analysis is a technique used in statistics and modeling to assess the impact of changes in input variables on the output variable of a model. It involves exploring how much the model’s results vary when the input parameters are varied. Purpose: To understand the relative importance of different input variables. To assess […]
Longitudinal Data
Longitudinal data is a type of data collection that involves tracking the same set of individuals over a period of time. This type of data is often used to study changes in variables or to investigate relationships between variables over time. Characteristics of longitudinal data: Repeated measurements: Data are collected multiple times for the same […]
Bankruptcy
Bankruptcy is a legal process in which a person or business declares that they are unable to pay their debts. There are many different types of bankruptcy, each with its own unique set of benefits and drawbacks. Types of Bankruptcy: Chapter 7: Also known as liquidation, this is the most common type of bankruptcy for […]
Tariff, Tariff Meaning
Sure. Tariffs are duties levied on imported goods. They are usually calculated as a percentage of the value of the goods. Tariffs are used to protect domestic industries from foreign competition, to raise revenue, and to regulate trade.
Discount Rate
Definition: The discount rate is the rate of interest used to calculate the present value of a future sum of money or the future value of an investment. It is the rate of return that an investor would receive on an investment if it were made today. Formula: The formula for calculating the discount rate […]
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