Companies face various types of risk due to their nature. Therefore, they need an efficient risk management strategy to run successfully. Similarly, investors need to identify these risks before investing in a company’s equity or debt instruments. Among those risks, two risks often occur more, market and credit risk. What …

Investors expect high returns from their investment. They identify and invest in stocks that return the maximum possible returns. However, there are also risks associated with investments. Therefore, they need to manage their risks, as well. There are various investment strategies that they can use to achieve that. Among these …

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 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. …