What is Dollar Duration? Dollar duration is a bond analysis method that helps an investor ascertain the sensitivity of bond prices to interest rates changes. The method measures the change in the price of a bond for every 100 bps (basis points) of change in interest rates. Dollar duration can be applied to any fixed…
What is the Information Ratio? The information ratio measures the risk-adjusted returns of a financial asset or portfolio relative to a certain benchmark. This ratio aims to show excess returns relative to the benchmark, as well as the consistency in generating the excess returns. The consistency of generating excess returns is measured by the tracking…
What is the Forward Rate? The forward rate, in simple terms, is the calculated expectation of the yield on a bond that, theoretically, will occur in the immediate future, usually a few months (or even a few years) from the time of calculation. The consideration of the forward rate is almost exclusively used when talking…
What is Asset Valuation? Asset valuation simply pertains to the process to determine the value of a specific property, including stocks, options, bonds, buildings, machinery, or land, that is conducted usually when a company or asset is to be sold, insured, or taken over. The assets may be categorized into tangible and intangible assets. Valuations…
What is a Credit Union? A credit union is a type of financial organization that is owned and governed by its members. Credit unions provide members with a variety of financial services, including checking and savings accounts and loans. They are non-profit organizations that are intended to provide high-quality services to its members, not to maximize profits. In…
What is a Liquidity Event? A liquidity event is a process by which an investor liquidates their investment position in a private company and exchanges it for cash. The main purpose of a liquidity event is the transfer of an illiquid asset (an investment in a private company) into the most liquid asset – cash….
What Does Negotiable Mean? The term “negotiable” is commonly referred to as the price of a good or security, or any other term or provision in a contract or an agreement, that is not firmly settled between the parties and that can be adjusted. The negotiable price of a good or the negotiable term of…
