Adjusted Beta
What is Adjusted Beta? Adjusted beta tends to estimate a security’s future beta. It is a historical beta adjusted to reflect the tendency of beta to be mean-reverting – the CAPM’s beta value will move towards the market average, of 1, over time. The beta estimate based purely on historical data – known as the unadjusted...
Vasicek Interest Rate Model
What is the Vasicek Interest Rate Model? The Vasicek Interest Rate Model is a mathematical model that tracks and models the evolution of interest rates. It is a one-factor short-rate model and assumes that the movement of interest rates can be modeled based on a single stochastic (or random) factor – the market risk factor....
Strategic Alliances
What are Strategic Alliances? Strategic alliances are agreements between two or more independent companies to cooperate in the manufacturing, development, or sale of products and services, or other business objectives. For example, in a strategic alliance, Company A and Company B combine their respective resources, capabilities, and core competencies to generate mutual interests in designing,...
Medium of Exchange
What is a Medium of Exchange? A medium of exchange is a transitional instrument used to settle the trade of products and services among market participants. It is a system used to enable the exchange of items. Currency is the most common medium of exchange accepted as a standard by all parties for settling economic transactions....
Minsky Moment
What is a Minsky Moment? A Minsky Moment is a sudden collapse of the market following a long period of unsustainable speculative activity involving high debt amounts taken by investors. The term is frequently used to discuss past and/or probable future financial crises. It is named after an American economist, Hyman Minsky, who claimed that...
