Risk-free Rate is the expected return that an investment will yield without any risk. The actual return is always equal to the expected return. Table of Contents What Is the Risk-Free Rate of Return? To understand what makes an asset risk-free, let us go back to how risk is measured in investments. Investors who buys […]
EPS is a key financial metric used to measure a company’s profitability on a per-share basis. It provides insights into how much profit is attributable to each share of common stock, helping investors to assess the company’s financial performance and compare it with peers. Calculation of EPS The formula for calculating EPS is: Components Explained:
Treynor Ratio: What it is, Formula to Calculate it and More The Treynor Ratio is a financial metric that measures the returns of an investment relative to its systematic risk, represented by beta. It is particularly useful for evaluating the performance of a portfolio or a mutual fund when compared to market benchmarks. Table of
Fiscal policy refers to the government’s use of spending and taxation to influence the economy. It is a critical tool used to manage economic growth, control inflation, and reduce unemployment while addressing income inequality and stabilizing the national budget. Table of Contents Fiscal policy is one of the most essential tools that governments use to
A callable bond is a type of debt security that gives the issuer the right, but not the obligation, to redeem the bond before its maturity date. This feature is beneficial to the issuer, allowing them to refinance debt at lower interest rates if market conditions become favorable. For investors, callable bonds often come with
Hedging is a risk management strategy used in finance to offset potential losses in an investment by taking an opposing position in a related asset or market. The goal of hedging is to reduce or eliminate the impact of adverse price movements. Table of Contents Understanding Hedging: A Comprehensive Guide In the world of finance
