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Investors in asset-backed securities carry all the risks associated with that asset backed security. Hence, the need for credit rating for every such portfolio. Based on the credit ratings, investors in securitization portfolios demand a ‘protection’ against potential default by the borrowers whose loans make up that securitization portfolio. This … Read more
In this article we’re going to discuss what value at risk is. Basically what we’re trying is to estimate the level of possible losses over a given period of time with a certain probability. We have loss given certain probability. The basic principle of Value at Risk Value at risk … Read more
As we order spot yields to maturity of a combination of bonds by their maturity, we create yield curve. The yield curve is generally visualised as a graph with the time to maturity and yields on the axes. The curve has many implications in modern financial markets and are frequently … Read more
Risk-free rates are common subject of debate. If one aims to trade derivates with risk-free rates as their underlying, a reference rate is required on which institutions agree on so that they can do daily business. EURIBOR and LIBOR reference rates The EURIBOR and LIBOR serve as reference rates for … Read more
Bond contracts give holders of those bonds the right to partake legal actions when the provider of the bond fails to provide in contract terms such as promised payments. In the latter case of the bond issuer failing to make the promised bond payments, a default occurs. In case of … Read more
Microsoft recently introduced in-built live stock data into Excel. No more cumbersome work involving data extraction or using external sources manually. A specific Stocks Data Type has been introduced to allow users to track investments, latests stock prices and other indicators. In this article we will guide you on how to … Read more
In short, the Kelly Criterion is an approach for maximizing the expected growth of assets by investing a fixed percentage of wealth in a series of investments, developed by JL Kelly in 1956. Example: Kelly criterion applied to betting The technique is renowned in the field of gambling. To introduce … Read more