What is an Interest Rate Collar? An interest rate collar is a specialized option that can be used to hedge against shifts in the interest rate. It provides a barrier for traders who utilize them by providing a ceiling for rising rates and a floor for declining rates. When creating an interest rate collar, a…
What is an Interest Rate Differential (IRD)? An interest rate differential is a charge that applies if a borrower pays off the entirety of the mortgage before its maturity date. Most mortgages that are given at major lending institutions charge either the interest rate differential or three months of payment interest. Generally, a lender will…
What is an Interest Rate Call Option? An interest rate option is a derivative whose contract value is based on interest rates. There are two types of interest rate options, calls and puts. An interest rate call option gives the individual who holds the option to profit off of a rise in interest rates. When…
What is Business Intelligence vs. Data Science? Business intelligence (BI) and data science are both data-focused processes, but there are some key differences between the two. In general, business intelligence focuses on analyzing past events, while data science aims to predict future trends. Data science requires a more technical skill set compared to business intelligence. What…
What is Input-Output Analysis? Input-output analysis is a type of economic model that describes the interdependent relationships between industrial sectors within an economy. It shows how the outputs of one sector flow into another sector as inputs. Wassily Leontief, who was a Soviet-American economist, developed the input-output analysis method, earning him the Nobel Prize in…
What is the Job Market? Rather than a physical marketplace, the job market is where the supply (individuals who are actively seeking jobs) and demand (businesses) of the labor force, as well as other factors, interact. The factors include the economic activity level, industry trends, the need for certain skill sets or education level, etc….
What is an Inflection Point? In mathematics, an inflection point refers to the point at which the curvature of a function changes its sign. In the business world, the meaning of inflection point is stretched to describe the turning point due to any dramatic change that may lead to a positive or negative result. Inflection…
What is the Industrial Goods Sector? In contrast to the consumer goods sector that produces goods and services directly consumed by households, the industrial goods sector provides capital goods to other businesses for manufacturing and construction. The sub-sectors include aerospace and defense, homebuilding, electric equipment, machinery, construction and engineering, distributors, etc. The industrial goods sector…
What is a Data Lake? A data lake refers to a central storage repository used to store a vast amount of raw, granular data in its native format. It is a single store repository containing structured data, semi-structured data, and unstructured data. A data lake is used where there is no fixed storage, no file…
What is Variance? Variance refers to the expected deviation between values in a specific data set. It measures the spread of each figure from the average value. Traders and market analysts often use variance to project the volatility of the market and the stability of a specific investment return within a period. Mostly, variance is…
