Return on Net Operating Assets (RNOA): Definition, Formula, Calculation, Example, Analysis, Meaning

Posted on February 25, 2023 By John

Return is the income an investor receives on their investment. It can be in the form of fixed income generated from the underlying asset. For example, dividends and interest receipts are a form of fixed income on instruments. However, a return can also come as capital gains or losses. Companies …

Goods in Transit: Definition, Accounting Treatment, Journal Entry, Example

Posted on February 24, 2023 By John

Accounting standards require a company to record inventory when the risks and rewards associated with the goods get transferred to it. Sometimes, the company may not be in physical possession of those goods. However, they may still need to record the inventory they have not yet received. In most cases, …

Everyday Low Pricing: Definition, What It Is, Examples, Strategy, Advantages

Posted on February 23, 2023 By John

Customer acquisition and retaining customers are top priorities for any business. One of the best ways to keep customers coming back is to provide them with everyday low pricing on their favorite products or services. Everyday Low Pricing or EDLP is a pricing strategy in which the same price is …

Construction Work in Progress: Definition, Accounting Treatment, Journal Entry, Example

Posted on February 22, 2023 By John

Some companies take up construction projects for internal use. These may include building a fixed asset for future use. Sometimes, this work may not be complete when a company prepares its accounts. Therefore, the company must perform specific accounting treatments to present this work. The process is not complex but …

An Option Pricing Model Based on Market Factors

Posted on February 21, 2023 By Harbourfront Technologies

In option pricing theory, the risk-neutral measure is a measure that allows for the valuation of financial instruments such as options. The risk-neutral measure is obtained by assuming that investors are indifferent to the risk and that the expected rate of return on all assets is equal to the risk-free …

Relative Strength Index Indicator for Trading Cryptocurrencies

Posted on February 10, 2023 By Harbourfront Technologies

Technical indicators are mathematical calculations based on the price, volume, or open interest of a security or index. They are used to help traders and investors analyze the behavior of securities in order to make informed investment decisions. Technical indicators are commonly used in technical analysis, which is a method …

Lead-Lag Relationships Between Industries of Developed Countries

Posted on February 4, 2023 By Harbourfront Technologies

In the financial markets, a lead-lag relationship is a type of correlation in which the performance of one asset precedes that of another. This means that when the price or performance of one asset increases or decreases, the price or performance of a second asset follows suit. This type of …

Diffusive Volatility and Jump Risks

Posted on January 29, 2023 By Harbourfront Technologies

Implied volatility is an estimation of the future volatility of a security’s price. It is calculated using an option-pricing model, such as the Black-Scholes model, as it takes into account various factors including the current price of the underlying asset and its strike price. Implied volatility helps investors to gauge …

How Accurate is Machine Learning Prediction in Finance?

Posted on January 26, 2023 By Harbourfront Technologies

Machine Learning (ML) is a type of Artificial Intelligence (AI) that provides computers with the ability to learn without being explicitly programmed. It focuses on the development of computer programs that can access data and use it to learn for themselves. The process of learning begins with observations or data, …

Factor Model for Delta-Hedged Options Returns

Posted on January 16, 2023 By Harbourfront Technologies

Options are contracts that allow traders to buy or sell a security at a predetermined price. Options give the holder the right, but not the obligation, to buy (call option) or sell (put option). They are traded on exchanges like stocks and have their own ticker symbols. Options can be …