Top Finance Certifications at a Glance To support your career goals, here’s a snapshot of best certifications for finance and accounting, the roles they align with, and the specialized skills they help develop: FMVA® – Financial Modeling & Valuation Analyst Best for financial modeling and valuation in corporate finance, FP&A, and investment banking. CFA –…
What are Fringe Benefits? Fringe benefits are the additional benefits offered to an employee, above the stated salary for the performance of a specific service. Some fringe benefits such as social security and health insurance are required by law, while others are voluntarily provided by the employer. Examples of optional fringe benefits include free breakfast…
What is a Fallen Angel? A fallen angel is a bond that was rated investment-grade but has since been downgraded to junk status due to the declining financial position of its issuer. The bond is downgraded by one or more of the big three rating services – Fitch, Moody’s and Standard & Poor’s (S&P). A…
What is Crack Spread? Crack spread refers to the pricing difference between a barrel of crude oil and its byproducts such as gasoline, heating oil, kerosene, and fuel oil. The business of refining crude oil into various components requires careful attention to market prices for the various byproducts. The spread estimates the profit margin that…
What is an Asset Class? An asset class is a group of similar investment vehicles. Different classes, or types, of investment assets – such as fixed-income investments – are grouped together based on having a similar financial structure. They are typically traded in the same financial markets and subject to the same rules and regulations….
What is Proprietary Trading? Proprietary Trading (Prop Trading) occurs when a bank or firm trades stocks, derivatives, bonds, commodities, or other financial instruments in its own account, using its own money instead of using clients’ money. This enables the firm to earn full profits from a trade rather than just the commission it receives from processing…
What are Junk Bonds? Junk bonds, also known as high-yield bonds, are bonds that are rated below investment grade by the big three rating agencies (see image below). Junk bonds carry a higher risk of default than other bonds, but they pay higher returns to make them attractive to investors. The main issuers of such…
What is a Mortgage-Backed Security (MBS)? A Mortgage-backed Security (MBS) is a debt security that is collateralized by a mortgage or a collection of mortgages. An MBS is an asset-backed security that is traded on the secondary market, and that enables investors to profit from the mortgage business without the need to directly buy or…
What is the New York Mercantile Exchange (NYMEX)? The New York Mercantile Exchange (NYMEX) is a commodity futures exchange located in Manhattan, New York City. It is owned by CME Group, one of the largest futures exchanges in the world. CME Group also runs the Chicago Mercantile Exchange and Chicago Board of Trade. The NYMEX…
What is the Primary Market? The primary market is the financial market where new securities are issued and become available for trading by individuals and institutions. The trading activities of the capital markets are separated into the primary market and the secondary market. Image from CFI’s Corporate Finance Fundamentals Course. The primary market is where companies…
