Short-selling or shorting is a risky trading strategy. It requires careful planning and execution to make it work. That’s why it is recommended for experienced traders only and experts do not suggest it for novice traders. Let us discuss what is the short-selling mechanism, its risks, and its rewards. Short Selling – Mechanism Short selling […]
Is Short Selling a Good Strategy? Read More »
A credit default swap is a financial derivative to swap the credit risk of a debt instrument. It can be used to transfer the default risk of the borrower for any type of debt instrument. Let us discuss what is credit default swap, how it works, and its pros and cons for all parties involved.
What is Credit Default Swap (CDS)? How Does It Work? Read More »
Year-over-year or year-on-year (YOY) is a comparison term you have seen everywhere. It is used to compare two annual figures and is most commonly used in financial data sets. YOY analyses are common for economic, business, and investment analyses. It is a simple term and can be calculated easily for any type of data. Let
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A wash sale transaction is when taxpayers try to “wash” capital losses on trading transactions. As a taxpayer, you cannot sell a stock at a loss and immediately repurchase the same or identical securities within 30 days. Let us discuss what is the wash sale rule, how it works, and how you can avoid it.
What is the Wash Sale Rule and How Does it Work? Read More »
Net assets or net asset value is a widely used concept in business valuations and investment fund appraisals. Investors can use NAV as a performance indicator of a mutual fund or ETF. It is the difference between the assets and liabilities of a business or a fund. Let us discuss what is NAV, how to
What is Net Asset Value (NAV) and How to Calculate it? Read More »
The average true range (ATR) is a technical indicator to give you an idea of how much the price of an asset can move. However, it wouldn’t indicate the direction of the move for you. ATR is a useful metric to assess the price volatility of assets for a given timeframe. It can be used
What is Average True Range (ATR) and How to Calculate It? Read More »
The cost-to-income or efficiency ratio of a bank is useful efficiency and profitability ratio. It links operating expenses to operating income generated by a business. Let us discuss what is a cost-to-income ratio and why it is important for banks. What is the Cost-to-Income Ratio? The cost-to-income ratio (CIR) is an efficiency metric that compares
What is the Cost-to-Income Ratio and Why It is Important for Banks? Read More »
What is Net Present Value? The net present value (NPV) refers to the discounted present value of future cash flows (positive and negative) from an investment for a specified period (usually until maturity). In simple words, it is the sum of all future cash flows discounted to the present terms. In practice, it is the
NPV Vs ROI Vs EVA – What are the Differences? Read More »
Deferred revenue is unearned income that a business received in advance. It is recorded as a current liability on the balance sheet of a business. Once the seller delivers the promised goods/services, the current liability is removed and turned into earned revenue in the income statement. Let us discuss what is deferred revenue, how it
Is Deferred Revenue a Liability? Read More »
Depreciation, amortization, and depletion are all cost allocation methods for different types of long-term assets owned by businesses. All of these are accounting terms with non-cash entries and effects on profits. These accounting methods help companies follow the accrual accounting principles of matching entries. Let us discuss what these terms and the key differences between
Depreciation Vs Amortization Vs Depletion – What is the Difference Between Them? Read More »
