Month: February 2020

Variability, almost by definition, is the extent to which data points in a statistical distribution or data set diverge—vary—from the average value, as well as the extent to which these data points differ from each other. In financial terms, this is most often applied to the variability of investment returns. Understanding the variability of investment returns is just as important to professional investors as understanding the value of the returns themselves. Investors equate a high variability of returns to a higher degree of risk when investing. read more

A commodity is a basic good used in commerce that is interchangeable with other goods of the same type. Commodities are most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers.

Articles of incorporation is a set of formal documents filed with a government body to legally document the creation of a corporation. Articles of incorporation generally contain pertinent information, such as the firm’s name, street address, agent for service of process, and the amount and type of stock to be issued. Articles of incorporation is also referred to as the corporate charter, articles of association or certificate of incorporation.

Capital gain is a rise in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold. A capital gain may be short-term (one year or less) or long-term (more than one year) and must be claimed on income taxes.

The Vasicek interest rate model (or simply the Vasicek model) is a mathematical method of modeling interest rate movements. The model describes the movement of an interest rate as a factor composed of market risk, time, and equilibrium value, where the rate tends to revert towards the mean of those factors over time. Essentially, it predicts where interest rates will end up at the end of a given period of time, given current market volatility, the long-run mean interest rate value, and a given market risk factor. read more

Capital gain is a rise in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price. The gain is not realized until the asset is sold. A capital gain may be short-term (one year or less) or long-term (more than one year) and must be claimed on income taxes.

The Vasicek interest rate model (or simply the Vasicek model) is a mathematical method of modeling interest rate movements. The model describes the movement of an interest rate as a factor composed of market risk, time, and equilibrium value, where the rate tends to revert towards the mean of those factors over time. Essentially, it predicts where interest rates will end up at the end of a given period of time, given current market volatility, the long-run mean interest rate value, and a given market risk factor. read more

FactSet Research Systems provides computer-based financial data and analysis for financial professionals, including investment managers, hedge funds, and investment bankers. It consolidates data on global markets, public and private companies, and equity and fixed-income portfolios. FactSet was founded in 1978 by Howard Wille and Charles Snyder and is headquartered in Connecticut, with additional offices in the United States and around the world. The Motley Fool is a major customer who uses their information. read more

The endowment effect refers to an emotional bias that causes individuals to value an owned object higher, often irrationally, than its market value.

The short Interest ratio is a simple formula that divides the number of shares short in a stock by the stock’s average daily trading volume. Simply put, it can help an investor very quickly find out if a stock is heavily shorted or not shorted versus its average daily trading volume. The term is also used interchangeably with days to cover.