The modern portfolio theory is a mathematical model/investment theory that allows investors to create asset portfolios that maximizes expected based for for a given level of risk. Table of Contents What Is Modern Portfolio Theory (MPT) The modern portfolio theory is a mathematical model/investment theory that allows investors to create asset portfolios that maximizes expected […]
Equity risk premium is the excess return that investing in the stock market provides over a risk-free rate. The excess return is due to the additional risk taken by investors when investing in equities Table of Contents What Is Equity Risk Premium? The equity risk premium is the difference between the returns on individual stocks and
Hypothesis testing is a statistical method used to determine whether there is enough evidence in a sample of data to support or reject a proposed hypothesis about a population parameter Table of Contents What Is Hypothesis Testing? Hypothesis testing is a statistical method for making a decision based on experimental data. Hypothesis testing is essentially
A credit score predicts your credit behavior, such as how likely you are to pay a loan back on time, based on information from your credit reports. The higher your credit score, the better your chances of securing loans with favourable terms. Table of Contents What Is a Credit Score? A credit score is a number
The bid-ask spread represents the gap between the highest price a buyer is prepared to pay for an asset and the lowest price a seller is willing to accept. Table of Contents What Is Bid-Ask Spread? A bid-ask spread is the difference between the highest price a buyer is willing to pay for an asset
Penny stocks are those that trade at a very low price, have very low market capitalisation, are mostly illiquid, and are usually listed on a smaller exchange. Table of Contents What Are Penny Stocks? Penny stocks are those that trade at a very low price, have very low market capitalization, are mostly illiquid, and are
Default happens when a borrower cannot pay back their interest or principal amount as agreed in the terms of a loan or contract. Table of Contents What Is a Default? In the world of finance, the term “default” might sound intimidating, but it’s an essential concept to understand. A default happens when someone fails to fulfill
Investment-grade bonds are a type of bond issued by a government or corporation that is considered to have a relatively low risk and less probability of default. Table of Contents What Is Investment Grade Bonds? An investment-grade bond is a bond classification that indicates bonds with a relatively low credit risk compared to other bonds. Entities
Junk Bonds are the fixed-income securities that carries high level of risk as the probability of default is higher. Table of Contents What Is Junk Bond? A junk bond is a high-risk, high-yield bond issued by companies or entities with lower credit ratings. These bonds offer higher interest rates to compensate investors for the increased
A zero-coupon bond is a type of bond that doesn’t pay periodic interest (coupons). Instead, it is sold at a deep discount to its face value Table of Contents What is a Zero-Coupon Bond?  Zero coupon bonds are bonds that do not pay interest during the life of the bonds. Instead, investors buy zero coupon
