Blog Category: Financial Terms
Get definitions and guidance on all the terms you need to know within accountancy and finance.
Probability Mass Function and Probability Density Function
Probability Mass Function & probability density function with Example, this function returns the probability that a r...
Basel II: Three Pillars
While Basel I improved the way capital requirements were determined for banks worldwide, it had some major limitations.
Binomial Trees
A binomial model is a model that assumes that interest rates can take only one of two possible values in the next period
What is Technology Risk?
Technology can be used to mitigate operational risks. Automated procedures are generally less prone to error than man...
How to Calculate Discount Factor?
Discount factors is the value that allow us to relate a cash flow received in the future to its value today.
What are Credit Ratings?
A credit Rating is a quantified assessment of the creditworthiness of a borrower in general terms or with respect to ...
Volatility Smiles
Volatility smiles are implied volatility patterns generated when option traders allow implied volatility to depend on...
What is a Subprime Mortgage?
A subprime mortgage is a loan secured by real estate and issued to a credit-worthy borrower.Subprime borrowers have a...
Migration Risk
Migration risk is the risk that the credit quality of a debtor decreases following the lowering of credit ratings.
Bond Valuation
Bond Valuation is the amount of money that investors are willing to pay for the stability and guaranteed interest tha...
Exposure, Loss Given & Probability Defaults
After the financial crisis, international laws were added to reduce the Exposure at Default, Loss Given Default and P...
European Options
A European options contract limits execution to the expiration date, providing more certainty for the buyer.