Who is a Credit Analyst? A credit analyst is someone responsible for evaluating the risk factors that affect loans and debts. Credit analysts are trained individuals who have a financial background in examining loan applications. They are different from loan officers who assist clients throughout the loan process. Instead, credit …

The term risk represents any chance or uncertainty that an outcome will differ from the expected outcome. Usually, any scenario that consists of uncertain possibilities that can result in losses constitutes the risk for that scenario. There are various types of uncertainties that investors can face according to their active …

In the past, it was challenging for lenders to assess a borrower’s creditworthiness, which resulted in high credit risks. However, things have changed since that time. It is common practice for most lenders to check a borrower’s creditworthiness through credit ratings. These credit ratings usually come from agencies known as …

When making investment decisions in a company, investors consider various factors. Among these, profits are the most crucial as they can impact the investors’ future returns. However, a company’s earnings may not be meaningful if it has cash flow problems or operational inefficiencies. There are two terms, closely related to …

Capital structure defines the mix of debt and equity finance that a company has at its disposal. Every company utilizes a different combination of several finance sources to increase their benefits while decreasing costs. Companies can make a decision about their capital structure by using various models or theories. One …

Behavioural economics studies the psychology that relates to the decision-making process of investors. It looks at how investors allow psychological factors to impact their decisions. It goes against traditional finance theories, which assume that individuals don’t let biases affect their decision-making. Behavioural economics also studies the subsequent effects on the …

What is Behavioural Finance? Behavioural finance is a field of behavioural economics that deals with investors’ psychological influences and biases. It studies how these influences and biases affect the financial behaviour that investors use in investing decisions. Similarly, behavioural finance also explores market anomalies, specifically in the stock market. It …

A company’s capital structure defines the mix of equity and debt finance used to finance its activities. For every company, the capital structure will differ based on its needs and usage. This combination of equity and debt finance may also vary during a period or from one year to another. …

What is Hedging? Hedging is a process that investors use to protect their finances from any risks. In other words, hedging is the process that investors use to mitigate their risks. They do so to reduce the chances of losses or offset their assets against the losses. Hedging is also …

A convertible bond is a type of bond that comes with the right to convert the debt into equity instruments. Investors that invest in these bonds get the benefits of other debt instruments while also getting the option to receive equity investments. Convertible debts come with interest payments and face …