In the financial industry, data plays a critical role in enabling managers to make informed decisions and manage risk effectively. Financial data can come from a wide range of sources, including economic indicators, company financial statements, market data, customer transaction histories, and social media sentiment. By analyzing this data, financial …

Credit risk is the probability of loss from a borrower or counterparty. It is also known as default risk and refers to the potential that an entity may not be able to meet its obligations when due. Credit risk can arise from various sources including individual borrowers, companies, government entities, …

Volatility of an asset is the measure of how much its price changes over time. The higher the volatility, the greater the price swings. There are two types of volatility: historical and implied. Historical volatility is a measure of how much an asset’s price has fluctuated in the past. Implied …

The beta of a stock is a measure of the stock’s volatility in relation to the market. In other words, it is a measure of how much a stock price fluctuates with the overall market. A higher beta means more volatile and a lower beta means less volatile.  A stock …

With the inflation numbers rising these days, one would think that the consumer expectation of future inflation remains high. A recent article published by the Federal Reserve Bank of New York just pointed out the opposite: consumers expect inflation to decrease in the future and the risk of deflation …

Monetary policy is the process by which a government, central bank, or monetary authority manages the money supply to achieve specific objectives. In most countries, these objectives are stabilization of prices and maintenance of low inflation. Monetary policy is also used to manage economic growth, employment, and exchange rates. Monetary …

The zero-cost collar strategy is an options trading strategy that involves the simultaneous purchase of a put option and the sale of a call option. The options are usually of the same maturity, and the transaction results in a zero or small credit to the trader’s account. This strategy is …

Companies may hold various instruments. For each, they estimate the amount they can expect to receive. In most cases, it is the same as the amount calculated under the contract terms. However, it may also differ in some cases, causing a credit loss. Companies must estimate this loss to reach …

Correlation is a statistical measure of the relationship between two variables. In trading, correlation is used to identify relationships between different securities. For example, a trader might want to know if two stocks move in the same direction. If they do, they are said to be positively correlated. If they …

An Exchange Traded Fund (ETF) is a fund that tracks an index, sector, or basket of assets just like a traditional mutual fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold. The ETF market has experienced massive …