Inflation and interest rates are two topics that come up often in economics. Both of these relate to the macroeconomics area of economics. While both play a crucial role in a country’s economy, there are also often interrelated. However, before understanding their relationship, it is critical to understand what each …

Investors have the option to invest in various assets. Among these, the most well-known are bonds and stocks. The reason behind their popularity is the balance between the risks and rewards they provide to investors. However, both are different from each other in their characteristics and the markets or brokers …

What is a Market Index? A market index is a portfolio of securities that represent a segment of the stock market. These securities come with specific characteristics and are a part of a particular stock market index. The value of the index comprises the price of the underlying holdings. However, …

When it comes to implementing an investment portfolio, there are two crucial strategies that investors can use. These are asset allocation and diversification. Both of these strategies correlate the risks taken by investors in their portfolio for their given risk tolerance. Similarly, investors can limit their exposure due to risk …

What is a Monte Carlo Simulation? A Monte Carlo simulation refers to a technique used in financial modeling to determine the probability of various outcomes in a process or problem that is not easily predictable or solvable. The reason behind the difficulty of the process or problem is the existence …

When it comes to investing strategies and managing their portfolios, investors have two main options. They can either use an active or passive management strategy. Both of these strategies have their advantages and disadvantages. However, investors must choose their own tactics that suit them. To know which option is the …

What is Hypothesis Testing? Hypothesis testing is a concept in statistics in which analysts test an assumption regarding a population parameter. It is a method used in statistical inference. The use of hypothesis testing is useful when determining if a statement regarding a population parameter is statistically significant. Overall, it …

What is Confidence Interval? The confidence interval, in statistics, represents an estimate of an interval that may consist of a population parameter. In other words, it refers to the probability of a population parameter falling between a set of values for a particular proportion of times. A confidence level is …

What is Monte Carlo Simulation? Monte Carlo Simulation is a method from statistics used in financial modeling used to determine the probability of various outcomes in a process or problem that is not easily predictable or solvable because of the existence of random variables. The simulation produced by this model …

Variance and standard deviation are two fundamental concepts in mathematics that have a vital application in the worlds of finance, economics, investing, and accounting. In investing, investors use these to devise a plan for their investments. It can help them build an attractive portfolio by developing an effective trading strategy. …