There always exists some economic indicator that would have predicted the most recent crisis. This indicator is flawless in its predictions only after the storm has hit the town. Seasoned readers may remember
In the financial markets, the definition of volatility is assumed to be standard deviation. However, in practice, people seem to either forget the definition or completely substitute it with the mean absolute deviation.
“Correlation” has to be one of the most commonly used terms in the business and finance world. It facilitates the communication of ideas and gives the speaker just enough to sound sophisticated but
The no-arbitrage principle is one of the strongest in capital markets theory. Without it, we open the door to (not slight but) gross irrational behavior.
What is arbitrage?
An arbitrage opportunity exists when
Imagine this: you just accepted a position as a member of the investment committee of a global corporation. Other members include the CFO, the Treasurer, and other senior executives. Your job is to