What is the Exponentially Weighted Moving Average (EWMA)? The Exponentially Weighted Moving Average (EWMA) is a quantitative or statistical measure used to model or describe a time series. The EWMA is widely used in finance, the main applications being technical analysis and volatility modeling. The moving average is designed as such that older observations are…
What is a Contingency? A contingency is the chance occurrence that a future event is likely to cause a negative impact on an organization or person. It is a condition or a probable future event occurring by chance, deliberately or not. In addition, its occurrence and the resulting effects will necessitate special or extraordinary measures…
What is the Fast Stochastic Indicator? The fast stochastic indicator (%K) is a momentum technical indicator that aims to measure the trend in prices and identify trend reversals. The indicator was developed by securities trader and technical analyst George Lane. The indicator is driven by two parameters: the lookback period and the smoothing parameter. The…
What is Material Requirements Planning (MRP)? Material requirements planning (MRP) is an inventory management system that is completely operated digitally through a wide variety of computer-based platforms. MRP is exclusively designed to improve the inventory efficiency of a business by estimating quantities of raw material and scheduling timely deliveries. In addition, the material requirements planning…
What is Agency Theory? Agency theory is a concept used to explain the important relationships between principals and their relative agent. In the most basic sense, the principal is someone who heavily relies on an agent to execute specific financial decisions and transactions that can result in fluctuating outcomes. Because the principal relies so heavily…
What is a Financial Instrument? Financial instruments are contracts for monetary assets that can be purchased, traded, created, modified, or settled for. In terms of contracts, there is a contractual obligation between involved parties during a financial instrument transaction. For example, if a company were to pay cash for a bond, another party is obligated…
What is Financial Literacy? Financial literacy is the cognitive understanding of financial components and skills such as budgeting, investing, borrowing, taxation, and personal financial management. The absence of such skills is referred to as being financially illiterate. According to the Financial Industry Regulatory Authority (FINRA), about 66% of the American population is considered financially illiterate. Being…
What is the Code of Ethics? Code of ethics refers to the official standards of conduct or guiding principles that a professional is expected to follow in an individual or combined capacity. A code of ethics can exist at various levels and across different functions. There is a corporate code of ethics (CCE), as well…
Although technology is rapidly changing how organizations do business, finance professionals continue to play a critical role. While you should certainly invest in technology, you also need to focus on building an expert financial workforce. Embracing training for financial professionals is one of the best ways to accomplish that goal. The development of financial skills…
What is a High-Yield Investment Program (HYIP)? A high-yield investment program (HYIP) is an unregistered investment vehicle that promises significantly higher returns with little or no risk. They are typically run by unlicensed individuals and are scams, taking money from new investors to pay existing investors. HYIP can also be referred to as a prime…
