Relationship Between Bond Prices and Yields
The bond market has been a topic of focus recently given the fallout of Silicon Valley Bank (SVB) and Signature Bank. There's an inverse relationship between bond prices and yields. This means that when bond prices go up, yields go down, and vice versa. To understand...
What is Private Equity?
Private equity is a type of investment where a group of investors pools their money together to buy a company that is not publicly traded (meaning you can't buy its stock on a stock exchange). The goal of the investors is to help the company grow and become more...
What is a Hedge Fund?
A hedge fund is a type of investment fund that is run by professional money managers and caters to wealthy investors, institutions, and other sophisticated investors. Hedge funds aim to generate higher returns than traditional investments, such as stocks and bonds, by...
What is the CPA Exam?
The CPA (Certified Public Accountant) exam is a professional exam that someone takes to become a licensed public accountant. It's an extremely challenging exam that tests a person's knowledge in several areas related to accounting and finance. The exam consists of...
Back Office vs. Middle Office
Imagine that a store has three parts: the front, the middle, and the back. The front is where customers come to buy things, the middle is where the store keeps its inventory, and the back is where the store manages its finances and paperwork. In finance, we have...
Most Common Calculations using BA II Plus Financial Calculator
The BA II Plus Financial Calculator is a popular tool for performing a wide range of finance calculations in college. These aren't typically used in the professional world, as spreadsheet software is the go-to. Here are the most common calculations finance majors will...
Most Important Finance Hubs in the World
These are some of the most important financial hubs in the world: 1. New York City, US: New York City is home to Wall Street, the center of the global finance industry, and is home to major financial institutions like the New York Stock Exchange, the Federal Reserve...
What is the CFP Exam?
The CFP exam is a test that financial professionals take to become Certified Financial Planners. They help people manage their money, plan for their future, and make smart financial decisions. The CFP exam is made up of several sections that test a planner's knowledge...
What is the CFA Exam?
The CFA (Chartered Financial Analyst) exam is a certification for finance professionals typically specializing in areas such as investment management and financial analysis. The CFA program consists of three levels, each of which involves taking a six-hour exam. The...
Types of Deals in Investment Banking
These are the most common types of deals made in investment banking: 1. IPO (Initial Public Offering): This is when a company sells its shares to the public for the first time. When a company "goes public" through an IPO, it raises money from investors who buy its...
50 Most Common Acronyms in Finance
Here are some of the most common acronyms used and referenced in the finance world: IPO - Initial Public Offering M&A - Merger and Acquisition PE - Private Equity VC - Venture Capital IB - Investment Banking ECM - Equity Capital Markets DCM - Debt Capital Markets...
What is DCF Modeling?
DCF (Discounted Cash Flow) modeling is a type of financial analysis that is used to estimate the intrinsic value of a company. In simpler terms, it's a way to figure out how much a company is really worth. To understand how DCF modeling works, imagine that you're...
9 Bulge Bracket Investment Banks in the U.S.
The largest investment banks with operations in the United States, based on their total assets and global presence, are: JPMorgan Chase: With over $3 trillion in assets, JPMorgan Chase is the largest investment bank in the U.S. and offers a range of services including...
What was the Great Recession?
The Great Recession was a period of time between 2007 and 2009 when there was a severe economic downturn in many countries, including the United States. It was triggered by a housing market crash, which led to a financial crisis that spread throughout the entire...
What was the Great Depression?
The Great Depression was a period of extreme economic hardship that began in the late 1920s and lasted throughout the 1930s. It started in the United States but quickly spread to other countries around the world. During the 1920s, there was a lot of speculation in the...
What was the Dot Com Bubble?
In the late 1990s, there was a period of rapid growth in the technology industry, and many new internet companies were created. Investors were very excited about these companies and believed they would become extremely valuable in the future. People started investing...
What is the Front Office?
In the finance industry, the term "front office" refers to the parts of a firm that directly generate revenue through interactions with clients. This can include functions like sales, trading, and investment banking. In general, front office roles are focused on...
What does Buy Side and Sell Side Mean?
In the finance industry, there are two main sides of the business: the Buy Side and the Sell Side. The Sell Side refers to banks, brokerage firms, and other financial institutions that sell financial products and services to their clients. This can include things like...
3 Main Financial Statements Explained
There are three main financial statements that companies use to report their financial performance: the income statement, the balance sheet, and the cash flow statement. The income statement, also known as the profit and loss statement, shows how much money the...
What is Day Trading?
Day trading is where a person buys and sells stocks, options, or other financial instruments within the same day. The goal is to make a profit by taking advantage of small price movements in the market. In day trading, a person will buy a financial instrument at one...
How is a Share of Stock Different from an ETF?
A share of stock represents ownership in a single company, which means that when you buy a share of stock, you are buying a small piece of that company. If the company performs well and its profits increase, the value of the stock may go up, and you may be able to...
10 Famous People in the World of Finance
There are many well-known people in the finance industry, from successful investors and entrepreneurs to influential economists and policymakers. Here are some of the most famous names in finance: 1. Warren Buffett - billionaire investor, CEO of Berkshire Hathaway 2....
What is “Financial Modeling”?
Financial modeling is a technique used to make predictions about financial outcomes. It's a big math problem where you use data and formulas to make projections about what might happen in the future. A financial model might be used to help a company decide whether to...
What is the Role of the U.S. Treasury?
The U.S. Treasury is a government agency that manages the country's finances. Its main role is to oversee the collection of taxes, the issuance of government debt, and the management of the federal government's finances. Some functions of the Treasury include:...
The Federal Reserve and the History Behind it
The Federal Reserve, also known as the Fed, is the central bank of the United States. It's like a bank for banks, and its main purpose is to regulate the money supply and keep the economy stable. The Fed's "dual mandate" is to pursue maximum employment (healthy...
Most Common Finance Certifications
Chartered Financial Analyst (CFA): The CFA program is a globally recognized certification for investment professionals. It covers a broad range of topics, including portfolio management, asset valuation, and financial analysis. Certified Public Accountant (CPA): The...
What is Investment Banking?
Investment banking focuses on helping companies and governments raise money by issuing and selling securities. Securities are financial instruments like stocks, bonds, and options that can be bought and sold on financial markets. Investment banks act as intermediaries...
What is the VIX and Why Does it Matter?
The VIX, or the CBOE Volatility Index, is a way to measure how much people think the stock market will go up and down in the near future. Imagine you're playing a video game and you're not sure if the game is going to be easy or hard. You might feel nervous because...
Bull Market vs. Bear Market Explained
A "bull market" is a period of time when the stock market is rising and people are generally optimistic about the economy. This means that stock prices are generally going up, and people are willing to invest in stocks because they believe that they will continue to...