Capital asset pricing model
Investorline In finance, the capital asset pricing model (CAPM) is used to determine a theoretically appropriate required rate of return of an asset, if that asset is to be added to…
Capital (economics)
In economics, capital, capital goods, or real capital refers to already-produced durable goods used in production of goods or services. The capital goods are not significantly consumed, though they may…
Arbitrage pricing theory
Arbitrage pricing theory In finance, arbitrage pricing theory (APT) is a general theory of asset pricing, that has become influential in the pricing of stocks. APT holds that the expected…
What is Value investing?
Value investing Value investing is an investment paradigm that derives from the ideas on investment and speculation that Ben Graham and David Dodd began teaching at Columbia Business School in…
Explaining No free lunch with vanishing risk
No free lunch with vanishing risk No free lunch with vanishing risk (NFLVR) is a no-arbitrage argument. We have free lunch with vanishing risk if by utilizing a sequence of…
What do you understand by Interest rate parity?
Interest rate parity is a no-arbitrage condition representing an equilibrium state under which investors will be indifferent to interest rates available on bank deposits in two countries. Two assumptions central…
What do you understand by Efficient-market hypothesis
In finance, the efficient-market hypothesis (EMH) asserts that financial markets are "informationally efficient". That is, one cannot consistently achieve returns in excess of average market returns on a risk-adjusted basis,…
What is Volatility arbitrage?
Volatility arbitrage In finance, volatility arbitrage (or vol arb) is a type of statistical arbitrage that is implemented by trading a delta neutral portfolio of an option and its underlier.…
What is Uncovered interest arbitrage
Uncovered interest arbitrage is a form of arbitrage where funds are transferred abroad to take advantage of higher interest in foreign monetary centers. It involves the conversion of the domestic…
What is Triangular arbitrage?
Triangular arbitrage Triangular arbitrage (sometimes called triangle arbitrage) refers to taking advantage of a state of imbalance between three foreign exchange markets: a combination of matching deals are struck that…