CHEAPEST TO DELIVER

Cheapest to Deliver

Cheapest to Deliver

Cheapest to deliver is a method that is used to estimate which is the least expensive future contract for a seller to deliver to its buyer. The conversion factor is used to estimate the cheapest value. This conversion factor is generated by the Chicago Board of Trade (CBOT) and Chicago Mercantile Exchange (CME). Investors trading in futures contracts must be aware of the term cheapest to deliver and must gain a full understanding of this method. (more…)
Reverse Stock Split

Reverse Stock Split

Reverse Stock Split

Reverse Stock Split is a type of corporate action that consolidates the number of existing shares into fewer, proportionally more valuable shares. The reduction in the total number of shares outstanding in the open market can be tracked for a number of reasons and often signals a company in need. A reverse stock split divides the total number of shares in existence by a number such as five or ten, which is then classified as 1- for -5 or 1-for-10 reversed split. It is also known as stock consolidation or stock rollback and is the opposite exercise of a stock split in which a stock is split into multiple parts. (more…)
Adverse Selection

Adverse Selection

Adverse Selection

Adverse selection, also called anti-selection, is a market mechanism in which buyers or sellers of a good or service are able to use the confidential information about the risk variables in the transaction for the purpose of maximizing their own outcomes at the cost of other parties. (more…)
Autoregressive Integrated Moving Average (ARIMA)

Autoregressive Integrated Moving Average (ARIMA)

Autoregressive Integrated Moving Average (ARIMA)

Statistical models have become increasingly valuable as the quantity and diversity of data have continued to increase. One such model is ARIMA, also known as Auto-Regressive Integrated Moving Average, which is significant in the field of data science and machine learning. It forecasts by regressing past results, but it does not necessarily require specialized statistical expertise. It can be designed with minimal data and can be easily created, introduced, and evaluated. (more…)
Market Cycle

Market Cycle

Market Cycle

The emergence of trends or patterns during different markets or business environments is referred to as a market cycle or a stock market cycle. It is a period of movement from highs to lows. The movement is from increasing prices, strong performances, and bullish markets to weak performances, falling prices, and bearish markets and then back to bullish markets. The stock price during the movement rises initially then falls down and rises again. (more…)
Open Ended Investment Company

Open-Ended Investment Company

Open-Ended Investment Company

Open-Ended Investment Company is also known as OEIC is a format or structure to invest in various bonds, securities, and stocks which are formed under Corporation of Open-Ended Investment Company Regulations 2001 in the United Kingdom. The shares in OEIC are listed on the London Stock Exchange (LSE). These funds can adjust the fund size according to the investor’s preference and the prices of the shares are based on the fund size of the investor. (more…)
Markets in Financial Instruments Directive (MiFID)

Markets in Financial Instruments Directive (MiFID)

Markets in Financial Instruments Directive (MiFID)

MiFID comes under article 51(3) which was made by the European union to standardized regulations in the European union’s (EU) financial market for all investment services. It increases transparency across the European Union financial market. The directives were drafted in 2004 and have been in force in the European Union since 2007. MiFID seeks to improve investor security and equal opportunity by implementing a collection of universal regulations and standards for financial institutions. (more…)
Correlation in Financial Market

Correlation in Financial Market

Correlation in Financial Market

In statistics, correlation means two or more variables moving together. Correlation in financial investment industries is the relation between two financial securities moving with each other statistically. It is computed as the correlation coefficient which has the value that must fall between -0.1 to +0.1. The relationship strength of the two variables is demonstrated by the correlation coefficient and expressed numerically. A positive correlation indicates movements in the same direction & a negative correlation indicates movement in opposite direction. There are various types of correlation in financial industries used to relate two or more financial securities they are - Inverse correlation, cross-correlation, multiple correlations, etc. (more…)
Floating Rate Notes

What are Floating Rate Notes

Floating Rate Notes

Floating rate notes are also known as Floater. A Floater is a kind of a bond or a debt instrument which a variable coupon rate, which can also be term as "interest rate", which is decided on the basis of the benchmark rates such as the U.S. Treasury note rate and London Interbank Offered Rate (LIBOR), also known as Federal Reserve funds rate. The rate can be adjusted monthly or, quarterly on the basis of these benchmark rates. These instruments are issued by financial institutions, governments, and other corporate bodies. (more…)
Arbitrage – How does it Work?

Arbitrage – How does it Work

Arbitrage - How does it Work?

The financial markets are experiencing the engagement of thousands of traders and investors on a regular basis, wherein each participant's primary goal is to make a profit. There are a number of trading methods and strategies in the financial markets. However, a trading strategy can only be implemented if the price of the asset indicates a favorable movement. Arbitrage is an unconventional but simple method for acquiring capital markets. (more…)