Fundamental Law of Active Management
What is the Fundamental Law of Active Management? Developed by Richard Grinold and Ronald Kahn, the Fundamental Law of Active Management states that an active manager’s productivity depends on the quality of his/her skills and, consequently, the frequency in which the skills are applied at work. The law can also be expressed in an equation....
Inflation Hedge
What is Inflation Hedge? Inflation hedge is an investment that is made for the purpose of protecting the investor against decreased purchasing power of money due to the rising prices of goods and services. The ideal investments for hedging against inflation include those that maintain their value during inflation or that increase in value over...
Annual Percentage Yield
What is the Annual Percentage Yield (APY)? The annual percentage yield (APY) is a normalized interest rate based on the compounding period of one year. The APY provides a standardized representation of the underlying interest rates of financial products. The primary advantage of the annual percentage yield is the consideration of the compounding effect. Recall...
Equity Crowdfunding
What is Equity Crowdfunding? Equity crowdfunding (also known as crowd-investing or investment crowdfunding) is a method of raising capital used by startups and early-stage companies. Essentially, equity crowdfunding offers the company’s securities to a number of potential investors in exchange for financing. Each investor is entitled to a stake in the company proportional to their...
Liquidity
What is Liquidity? In financial markets, liquidity refers to how quickly an investment can be sold without negatively impacting its price. The more liquid an investment is, the more quickly it can be sold (and vice versa), and the easier it is to sell it for fair value or current market value. All else being...
