What is Near-The-Money? Near-the-money means that an option contract’s stock price is close to its strike price. It is used to describe an option’s intrinsic value. An option only has intrinsic value if it is “in-the-money.” An option is rarely exactly at-the-money; therefore, near-the-money options are used as a proxy. Types of Options Call Options…
What is the New York Board of Trade (NYBOT)? Founded and established in 1870, the New York Board of Trade (NYBOT) is a physical commodity futures exchange. The NYBOT is located in New York City and trades futures and/or options on currencies, interest rates, market indexes, coffee, cotton, orange juice, cocoa, and sugar. It later…
What is a Trading Watch List? In investment banking, a trading watch list is maintained by the compliance group to comply with legal and regulatory requirements, mitigate conflicts of interest, prevent insider trading, and support information barriers. A watch list facilitates compliant securities trading surveillance and research monitoring activities to safeguard against improper use or disclosure…
Why Do Banks Try to Avoid Confidentiality Agreements? Whenever possible, investment bankers try to avoid entering into confidentiality agreements as a condition of receiving confidential information, particularly prior to obtaining a signed engagement letter. Confidentiality agreements (particularly those related to an M&A process) often contain provisions that can have unforeseen consequences on other areas of the bank’s…
What is Geometric Mean? The geometric mean is the average growth of an investment computed by multiplying n variables and then taking the nth –root. In other words, it is the average return of an investment over time, a metric used to evaluate the performance of a single investment or an investment portfolio. Why use…
What is a Contingent Beneficiary? A contingent beneficiary is the alternative beneficiary, designated by the account holder, who is set to receive the proceeds or benefits of a financial account only if the primary beneficiary is not able to accept the benefits at the time of payment. The financial account can be in the form…
Overview of eCommerce Business Models The eCommerce industry has undergone significant change since its rise in popularity during the 1990s and early 2000s. As the separation between offline and online has nearly disappeared, most companies have adopted some sort of hybrid or omnichannel approach to marketing their products or services. This guide outlines the most…
A Guide to Effective Data Presentation Financial analysts are required to present their findings in a neat, clear, and straightforward manner. They spend most of their time working with spreadsheets in MS Excel, building financial models, and crunching numbers. These models and calculations can be pretty extensive and complex and may only be understood by…
What is Hypothesis Testing? Hypothesis Testing is a method of statistical inference. It is used to test if a statement regarding a population parameter is statistically significant. Hypothesis testing is a powerful tool for testing the power of predictions. A Financial Analyst, for example, might want to make a prediction of the mean value a…
What is the Language of Business? In business, there are three main “languages” – accounting, finance, and economics. While there are many other disciplines in business, such as marketing, human resources, operations, etc., it’s the core principles and terminology behind accounting, finance, and economics that drive decisions across businesses. In this guide, we will break down the…
