What is the Credit Curve? The credit curve is the graphical representation of the relationship between the return offered by a security (credit-generating instrument) and the time to maturity of the security. It measures the investors’ sentiments about risk and can affect the return on investments. The difference between the first maturity on the curve…
What is the London Stock Exchange (LSE)? The London Stock Exchange (LSE), which is based in London, the United Kingdom, is one of the leading stock markets in the world. Owned by the London Stock Exchange Group, the LSE was established in 1571, making it one of the oldest stock exchanges in the world. The…
What is a Triangular Arbitrage Opportunity? A triangular arbitrage opportunity is a trading strategy that exploits the arbitrage opportunities that exist among three currencies in a foreign currency exchange. The arbitrage is executed through the consecutive exchange of one currency to another when there are discrepancies in the quoted prices for the given currencies. A…
What is the Chief Operating Officer (COO)? The Chief Operating Officer (COO) – a member of the executive management team for the company – is one of the highest positions at a company. COOs are directly and intimately connected to the Chief Executive Officer (CEO). Similar to the Vice President of a country, the COO…
What is the Capitalization-Weighted Index? The Capitalization-Weighted Index (cap-weighted index, CWI) is a type of stock market index in which each component of the index is weighted relative to its total market capitalization. In a capitalization-weighted index, companies with larger market capitalization exert a greater impact on the index value. Companies with a smaller market…
What is Pump and Dump? A pump and dump scheme is a type of securities fraud that involves the artificial inflation (“pump”) of the price of a security through false, misleading, or exaggerated statements regarding the security’s price. The fraudster can profit from the price inflation by quickly selling the securities at a high price (“dump”)….
What is Insider Information? Insider information, also called inside information, refers to non-public facts regarding a publicly traded company that can provide a financial advantage in the markets. In other words, insider information is knowledge and information on the operations, products/services pipeline, affairs, financial position, etc., of a company that is not accessible to the…
What is Dynamic Asset Allocation? Dynamic asset allocation is an investment strategy that involves the frequent adjustment of the weights in a portfolio based on the overall market performance or the performance of certain securities. Under the dynamic allocation strategy, a portfolio manager assesses the current market conditions and the performance of each asset class….
What is the Holding Period Return? The Holding Period Return (HPR) is the total return on an asset or investment portfolio over the period for which the asset or portfolio has been held. The holding period return can be realized if the asset or portfolio has been held, or expected if an investor only anticipates…
What is a Lock-Up Agreement? A lock-up agreement refers to a legally binding contract made between the insiders and underwriters of a company during its initial public offering (IPO) that prohibits them from selling any of their shares for a set period of time. These individuals may include venture capitalists, company directors, managers, executives, employees, and…
