Scenario Analysis
What is Scenario Analysis? Scenario analysis is a process of examining and evaluating possible events or scenarios that could take place in the future and predicting the various feasible results or possible outcomes. In financial modeling, the process is typically used to estimate changes in the value of a business or cash flow, especially when...
Economic Stimulus Package
What is an Economic Stimulus Package? An economic stimulus package is a combination of economic measures utilized by a government to stimulate a struggling economy. The stimulus package can be used as a preventive or reversing measure to stop or prevent a recession by lowering interest rates, increasing government spending, and quantitative easing, etc. aimed...
Corporate Bond Valuation
What is Corporate Bond Valuation? Corporate bond valuation is the process of determining a corporate bond’s fair value based on the present value of the bond’s coupon payments and the repayment of the principal. Corporate bond valuation also accounts for the probability of the bond defaulting and not paying back the principal in full. What...
Modified Dietz Return
What is the Modified Dietz Return? In modern portfolio theory, the Modified Dietz Return or Modified Dietz Method (“MDM”) is a commonly used algebraic method used to calculate the rate of return of an investment portfolio that includes the cash flows of the portfolio. The method accounts for the timing of when the cash flows...
Volatility Arbitrage
What is Volatility Arbitrage? Volatility arbitrage refers to a type of statistical arbitrage strategy that is implemented in options trading. It generates profits from the difference between the implied volatility of options and the forecasted volatility of underlying assets. The values of options are impacted by the volatility of their underlying assets. Higher volatility of...
