What is Factor Investing? Factor investing is an investment strategy that involves choosing assets based on a certain set of factors or attributes. Investors who want to follow a factor investing approach should identify characteristics that they look for in a stock. The characteristics are what they believe will be indicative of a stock’s success…
What is Cross Elasticity Demand (XED)? Cross elasticity demand, also known as XED, is the measurement of the sensitivity of quantity demanded for one good to the change in the price of another good. Complementary Goods Complementary goods are goods that are often bought together. If the price of good B increases, both the quantity…
What is a Currency Basket? A currency basket is a portfolio of various currencies that are weighted against a chosen currency. The weighted value can be used to determine the market value of a chosen currency or by investors to reduce currency risk. Making a Currency Basket Choosing Currencies For any given currency basket, the…
What is Factset? Factset Research Systems is a company that provides software and financial data solutions for investment professionals. The company offers a number of financial services, such as business advisory, data consolidation, market analytics, portfolio data management, and client support and learning. The services are tailored for both sell-side and buy-side individuals working in…
What is Macroeconomics? Macroeconomics refers to the study of the overall performance of the economy. While microeconomics studies how individual people make decisions, macroeconomics deals with the overall aggregate effect of microeconomics. Macroeconomics is crucial for the government to understand and predict the long-term consequences of their decisions. Goals of Macroeconomics The overarching goals of…
What is Cross-Border Financing? Cross-border financing is the process of sourcing funds from outside the home country’s border. It is useful for multinational businesses to conduct international trade without needing to hold a large reserve of working capital. Types of Cross-Border Financing 1. Cross-Border Loans Cross-border loans work similarly to regular loans – the difference…
What is Enterprise Risk Management (ERM)? Today’s business environment is complex and interconnected. Financial institutions are complex organizations confronting numerous internal and external risks that can substantially influence their operations and success. Enterprise Risk Management stands out as a vital strategic tool to measure, mitigate, and manage these uncertainties. This article explores the principles and…
What is a Banker’s Acceptance? A banker’s acceptance refers to a financial instrument that represents a promised future payment from a bank. It states the name of the entity to which the funds need to be transferred, along with the amount and date of payment. Banker’s acceptances are short-term instruments that generally come with a maturity…
What is a Quanto Swap? A quanto swap is a type of derivative that is cash-settled and a cross-currency interest rate swap. It is an attractive product for speculators and investors with exposure to a foreign asset but without the equivalent exchange rate risk. Types of Quanto Swaps Quanto credit default swap – When default…
