What is Elastic Net? Elastic net linear regression uses the penalties from both the lasso and ridge techniques to regularize regression models. The technique combines both the lasso and ridge regression methods by learning from their shortcomings to improve the regularization of statistical models. The elastic net method improves lasso’s limitations, i.e., where lasso takes…
What is LASSO? LASSO, short for Least Absolute Shrinkage and Selection Operator, is a statistical formula whose main purpose is the feature selection and regularization of data models. The method was first introduced in 1996 by Statistics Professor Robert Tibshirani. LASSO introduces parameters to the sum of a model, giving it an upper bound that…
What is the Financial Modeling Code? The financial modeling code serves as an essential guide to financial analysts and companies looking to predict future financial performance based on various assumptions and historical performance. The code explains how to build financial models, providing guidance on the models’ layout, appearance, and functionality. Users can create understandable, robust,…
What is a Decision Tree? A decision tree is a support tool with a tree-like structure that models probable outcomes, cost of resources, utilities, and possible consequences. Decision trees provide a way to present algorithms with conditional control statements. They include branches that represent decision-making steps that can lead to a favorable result. The flowchart…
What is Gradient Boosting? Gradient boosting is a technique used in creating models for prediction. The technique is mostly used in regression and classification procedures. Prediction models are often presented as decision trees for choosing the best prediction. Gradient boosting presents model building in stages, just like other boosting methods, while allowing the generalization and…
What is a Government Stimulus Package? A government stimulus package is a series of economic measures applied by a government to stimulate a stressed economy. The stimulus package can be used to strengthen an economy that is coming out of recession by lowering tax rates or increasing government spending in attempting to lower unemployment and…
What is Vertical Line Charting? Vertical line charting is a graphical representation of the various price points of a given asset over a given period of time, which may vary from 15 minutes or five years. A continuous line is used to connect a series of data points, and the resulting line reflects the overall…
What are Common vs Preferred Shares? Potential investors who are looking to acquire a stake or ownership in a company can choose to purchase between common vs preferred shares. Companies typically issue and sell shares to raise funds for a variety of business initiatives. It is important to know and understand the individual characteristics and…
What is an Appropriation Account? An appropriation account shows how an organization’s funds are distributed among partners, shareholders, and departments. For companies, an appropriation account shows how the company’s profits are divided and retained. For partnerships, it shows how profits are distributed among the partners. For governments, it shows how funds are allocated to specific…
What is Variable Life Insurance? Variable life insurance is a form of life insurance that combines the characteristics of life insurance and investment. The differentiating characteristics of a variable life insurance policy include policy loans and investment options. Variable Life Insurance – Characteristics 1. Premium As with any life insurance policy, variable life insurance mandates…
