What is the Greater Fool Theory? The Greater Fool Theory simply states that there will always be a “greater fool” in the market who will be ready to pay a price based on higher valuation for an already overvalued security. Markets are affected by a lot of irrational beliefs and expectations of market participants. Based…
Options Case Study To study the complex nature and interactions between options and the underlying asset, we present an options case study. It’s much easier to learn the use and payouts of options when we see it in practice. Firstly, however, let us briefly discuss the characteristics of the two main options. Options Case Study:…
Bond Issuers Bonds are issued as forms of tradable debt. The bond issuer is the borrower, while the bondholder or purchaser is the lender. At the maturity of the bond, bond issuers repay the bondholder the principal value. There are many types of bond issuers: Firms Governments Supranational Entities Regions and Municipalities Projects and SPVs…
Types of Markets Capital markets refer to marketplaces where investors buy and sell debt and equity, allowing businesses to access the money they need to fund new products and services or grow their operations. Explore the following roles in capital markets: Dealers (Over-the-counter) Exchanges Brokers To learn more, launch our online finance courses now! Dealer…
What are Trade Orders? Trade orders refer to the different types of orders that can be placed on trading exchanges for financial assets, such as stocks or futures contracts. The order-driven style of trading mechanisms matches buyers and sellers who have matching order criteria. In other words, a buyer with a buy price matching the…
What are Triangle Patterns? Triangle patterns are a commonly used technical analysis tool. It is important for every trader to recognize patterns as they form in the market. Patterns are vital to a trader’s quest to spot trends and predict future outcomes, enabling them to trade more successfully and profitably. Triangle patterns are important because…
What is the Aroon Indicator? The Aroon indicator, developed by Tushar Chande in 1995, actually consists of two indicators that together are designed to: Identify trend changes or the beginning of a trend Identify the existence of a trending or ranging market Spot corrective retracements or consolidation periods Gauge the strength of a trend The…
What is the Alternative Investment Market (AIM)? The Alternative Investment Market (AIM) was launched on June 19, 1995 as a sub-exchange market of the London Stock Exchange (LSE). The market was designed to help small, high-growth companies that are keen on raising capital for expansion. It has less onerous regulatory requirements, such as no set…
What is the Random Walk Theory? The Random Walk Theory, or the Random Walk Hypothesis, is a mathematical model of the stock market. Proponents of the theory believe that the prices of securities in the stock market evolve according to a random walk. A “random walk” is a statistical phenomenon where a variable follows no…
What are Fixed Income Securities? Fixed income securities are a broad class of very liquid and highly traded debt instruments, the most common of which is a bond. They generally provides returns in the form of regular interest payments and repayments of the principal when the security reaches maturity. They are different from equities, or…
