Category Securities Markets
What is gamma hedging?
What is gamma hedging? By Simon Gleadall, CEO of Volcube. To understand gamma hedging it is important to understand delta hedging first. Delta hedging eliminates the risk to an option owing to a change in the price of the underlying. Gamma hedging basically refers to a re-adjustment of a delta hedge. In this article we […]
US and Japanese Quantitative Easing, Bernanke said, it is Credit Easing
US and Japanese Quantitative Easing Quantitative Easing
Duration—What an Interest Rate Hike Could Do to Your Bond Portfolio
If you own bonds or have money in a bond fund, there is a number you should know. It is called duration. Although stated in years, duration is not simply a measure of time. Instead, duration signals how much the price of your bond investment is likely to fluctuate when there is an up or […]
Cost of Equity and Return on Equity
Definition of ‘Cost Of Equity’ In financial theory, the return that stockholders require for a company. The traditional formula for cost of equity (COE) is the dividend capitalization model: A firm’s cost of equity represents the compensation that the market demands in exchange for owning the asset and bearing the risk of ownership. Investopedia explains […]
Growth Stocks vs. Value Stocks
Growth Stocks vs. Value Stocks Investors are often confused about the differences between growth stocks and value stocks. The main way in which they differ is not in how they are bought and sold, nor is it how much ownership they represent in a company. Rather, the difference lies mainly in the way in which […]
SWAP agreement exemple
SWAP agreement exemple Company A, pays to a lender a variable interest rate (nominal $1M) every period (LIBOR+2%). Ex: in period 1, if LIBORis 5%, Company A pays 7% or $70k to the lender in that period. In period 2, if Libor goes down to 4%, Company A pays 6% or $60k in interest. LIBOR: […]
The Financial Engineer 