What is the Heath-Jarrow-Morton Model? The Heath-Jarrow-Morton Model – also known as the HJM Model – is a framework to represent forward interest rates using an existing term structure of interest rates. The model was created based on the work developed by David Heath, Robert A. Jarrow, and Andrew Morton during the late 1980s. Their…
Who is Harry Markowitz? Harry Markowitz is an American economist and creator of the influential Modern Portfolio Theory (MPT) still widely used today. Harry Markowitz Biography Harry Markowitz was born in Chicago, Illinois, on August 24, 1927. After completing his bachelor’s in philosophy at the University of Chicago, Markowitz returned to the university for a…
What is the Hang Seng Index (HSI)? The Hang Seng Index (HSI) is a stock market index in Hong Kong. It records and monitors the daily changes in stock prices of the 50 largest Hong Kong stock market companies. As companies on the Hong Kong Stock Exchange account for almost 60% of the Hang Seng Index, the…
What is Hard Call Protection? Hard call protection, also known as absolute call protection, is a requirement in a callable bond where the issuer does not have the ability to exercise the call before the specified date in the agreement. A callable bond is a type of bond where the issuer is allowed to redeem…
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…
