What is a Swap? A swap is a derivative contract between two parties that involves the exchange of pre-agreed cash flows of two financial instruments. The cash flows are usually determined using the notional principal amount (a predetermined nominal value). Each stream of the cash flows is called a “leg.” Introduced in the late 1980s,…
Equity Template This Equity Template will allow you to calculate a company’s book value and market value of equity using the accounting method and financial analysis method. Here is a preview of the template: Download Free Excel Template Download CFI’s Excel template to advance your finance knowledge and perform better financial analysis. What is Equity?…
What is Front Running? Front running is the illegal practice of purchasing a security based on advanced non-public information regarding an expected large transaction that will affect the price of a security. Front running is considered a form of market manipulation and insider trading because a person who commits a front-running activity expects security price…
What are FAANG Stocks? FAANG stocks are the publicly traded stocks of U.S. technology giants Facebook, Amazon, Apple, Netflix, and Google. They are among the best-performing technology and most well-known companies in the world. Currently, the combined market value of FAANG exceeds $3 trillion. It accounts for almost 10% of the U.S. stock market’s total…
What is a Circuit Breaker? A circuit breaker is a regulatory instrument that halts the trading of a security or an index for a certain period. Circuit breakers are triggered when a security experiences a large percentage swing in either direction or a market index experiences a catastrophic decline. Circuit breakers are used to prevent…
What are Option Greeks? Option Greeks are financial measures of the sensitivity of an option’s price to its underlying determining parameters, such as volatility or the price of the underlying asset. The Greeks are utilized in the analysis of an options portfolio and in sensitivity analysis of an option or portfolio of options. The measures…
Pre Money Post Money Valuation Analysis Template This pre money post money valuation analysis template will help you calculate the post money valuation of a company undergoing a Series X funding round. Here is a preview of the template: Download Free Excel Template What is Post Money Valuation? Post money valuation is the equity value of…
What is Effective Duration? Effective duration is the sensitivity of a bond‘s price against the benchmark yield curve. One way to assess the risk of a bond is to estimate the percentage change in the price of a bond against a benchmark yield curve such as a government par curve. The effective duration figure is…
What is Volatility? Volatility is a measure of the rate of fluctuations in the price of a security over time. It indicates the level of risk associated with the price changes of a security. Investors and traders calculate the volatility of a security to assess past variations in the prices to predict their future movements….
