Duration
A measure of a bond's price sensitivity to interest rate changes, expressed roughly in years. Modified duration gives a direct percentage: a bond with modified duration of 8 will fall about 8% in price for every 1% rise in yield (and vice versa).
Full Fixed Income breakdown →Put-Call Parity
A no-arbitrage relationship between a European call, a European put, the underlying stock, and a risk-free bond, all with the same strike and expiry: C + PV(X) = P + S₀. If it doesn't hold, an arbitrage opportunity exists.
Full Derivatives breakdown →GIPS
The Global Investment Performance Standards — a voluntary set of rules governing how investment firms calculate and present performance results, so track records can be honestly compared across firms.
Full Ethics breakdown →WACC
Weighted Average Cost of Capital — a company's blended cost of debt and equity financing, weighted by their share of the capital structure. Used as the discount rate for evaluating whether a project creates value.
Full Corporate Issuers breakdown →Gordon Growth Model
A dividend discount model that values a stock as a perpetuity of dividends growing at a constant rate: V₀ = D₁ / (r − g). Works best for stable, mature dividend-paying companies.
Full Equity Investments breakdown →Cash Conversion Cycle
The number of days it takes a company to convert resource inputs into cash flow — days of inventory outstanding plus days of sales outstanding, minus days of payables outstanding. Shorter is generally better for working capital efficiency.
Full Corporate Issuers breakdown →CAPM
The Capital Asset Pricing Model estimates an asset's expected return from its systematic risk: E(R) = Rf + β(Rm − Rf). Only systematic (market) risk is compensated — diversifiable risk isn't priced in.
Full Portfolio Management breakdown →Yield to Maturity (YTM)
The single discount rate that equates a bond's price to the present value of all its remaining cash flows. It's the bond's internal rate of return if held to maturity and every coupon is reinvested at that same rate.
Full Fixed Income breakdown →Convexity
A second-order correction to duration — duration alone assumes a straight-line relationship between yield and price, but the real relationship curves. Convexity captures how much duration understates a bond's price gain (or overstates its loss) for large yield moves.
Full Fixed Income breakdown →Efficient Frontier
The set of portfolios that offer the highest expected return for a given level of risk (or lowest risk for a given expected return). Any portfolio below this curve is "inefficient" — a better combination exists.
Full Portfolio Management breakdown →Time Value of Money (TVM)
The principle that a dollar today is worth more than a dollar in the future, because it can be invested to earn a return. Underlies present value, future value, annuity, and NPV/IRR calculations across nearly every other topic.
Full Quantitative Methods breakdown →Central Limit Theorem
States that the sampling distribution of the sample mean approaches a normal distribution as sample size grows, regardless of the shape of the underlying population — the reason confidence intervals and hypothesis tests can assume normality even when the data itself isn't normal.
Full Quantitative Methods breakdown →Elasticity
A measure of how responsive quantity demanded (or supplied) is to a change in price, calculated as the ratio of percentage change in quantity to percentage change in price. Magnitude above 1 is "elastic," below 1 is "inelastic."
Full Economics breakdown →Purchasing Power Parity (PPP)
The theory that exchange rates adjust over the long run so identical goods cost the same in different currencies — a country with persistently higher inflation should see its currency depreciate to compensate.
Full Economics breakdown →DuPont Analysis
Decomposes Return on Equity into three drivers — net profit margin, asset turnover, and financial leverage — so you can see which lever is actually responsible for a company's ROE, not just the headline number.
Full Financial Reporting breakdown →FIFO / LIFO
Two inventory cost-flow assumptions. FIFO ("first in, first out") assumes the oldest inventory costs are expensed first. LIFO ("last in, first out") assumes the newest costs are expensed first — during rising prices, this produces lower reported profit and lower ending inventory than FIFO. LIFO is not permitted under IFRS.
Full Financial Reporting breakdown →Capitalization Rate
In real estate direct capitalization valuation, a property's net operating income divided by its value. Rearranged: Value = NOI / cap rate — a lower cap rate implies a higher value for the same income.
Full Alternative Investments breakdown →J-Curve
The typical pattern of private equity fund returns over time — early years show negative returns (fees and early write-downs), followed by a sharp upward turn as portfolio companies mature and are exited. Plotted, it resembles the letter J.
Full Alternative Investments breakdown →Beta
A measure of an asset's systematic risk relative to the overall market — a beta of 1.4 means the asset tends to move 1.4× as much as the market, in the same direction. Beta above 1 amplifies both gains and losses relative to the market.
Full Portfolio Management breakdown →Contango / Backwardation
Describes the shape of a futures curve. In contango, futures prices are above the expected spot price (common when storage costs dominate). In backwardation, futures prices are below the expected spot price (common when there's a convenience yield to holding the physical commodity now).
Full Derivatives breakdown →