What is Financial Compliance? Financial compliance is the regulation and enforcement of the laws and rules in finance and the capital markets. It ranges through the entire financial spectrum, from investment banking practices to retail banking practices. ` Why is Financial Compliance Important? In the aftermath of the 2008 Global Financial Crisis, financial compliance became…
What is Vega Neutral? Vega neutral is a risk management strategy for options trading that aims to create a portfolio with a total vega of zero. Vega represents the sensitivity of the price of an option to the implied volatility of the underlying asset. It is one of “the Greeks” of options trading. Understanding the…
What is the Equal Credit Opportunity Act (ECOA)? The Equal Credit Opportunity Act (ECOA) is a law that was passed in October 1974 in the United States of America. The law makes it unlawful for creditors to discriminate against any applicant on the basis of race, religion, color, national origin, marital status, sex, or age….
What is the Vancouver Stock Exchange (VSE)? The Vancouver Stock Exchange (VSE) started operations out of Vancouver, British Columbia in 1907. The VSE continued to function as a standalone exchange until November 1999, when it was merged with other stock exchanges to create the Toronto Ventures Exchange (TSX-V). The VSE was home to mainly small-cap…
What is FCFF (Free Cash Flow to Firm)? FCFF, or Free Cash Flow to Firm, is the cash flow available to all funding providers (debt holders, preferred stockholders, common stockholders, convertible bond investors, etc.). This can also be referred to as unlevered free cash flow, and it represents the surplus cash flow available to a business if it was…
CFI Financial Modeling Time-Lapse (With Music!) In celebration of the 2018 CFI Financial Modeling Competition and World Championships, we released this financial modeling time-lapse video of a financial model being built in under 2 minutes! We hope you enjoy watching this Excel model being built, set to the music of Les Toreadors. You can register…
What is Monte Carlo Simulation? Monte Carlo Simulation is a statistical method applied in financial modeling where the probability of different outcomes in a problem cannot be simply solved due to the interference of a random variable. The simulation relies on the repetition of random samples to achieve numerical results. It can be used to…
Forecasting Cash Flow in a Financial Model This article on forecasting cash flow is the last part of the four-step financial forecasting model in Excel. Having completed our income statement and balance sheet forecasts, we can now turn to the cash flow statement to complete the four-step forecast modeling framework. By the end of this…
Forecasting Finance: Equity, Debt and Interest This article on forecasting finance is part three of the four-step financial forecasting model in Excel and focuses on how to model equity, debt, and interest. Having completed revenue forecasts down to EBIT for the income statement and operating assets forecast for the balance sheet, we can now move…
Top 10 Types of Financial Models There are many different types of financial models. In this guide, we will outline the top ten most common models used in corporate finance by financial modeling professionals. Here is a list of the ten most common types of financial models: Three-Statement Model Discounted Cash Flow (DCF) Model Merger Model…
