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Junk bonds are bonds with a credit rating of “BB” or lower. Junk bonds are also known as high-yield bonds because the higher risk associated with them typically means they carry a higher yield than other, safer investments. Junk bonds are usually issued by companies that are in need of money and can’t access conventional […]

Copper, and therefore copper stocks, are a hot item of interest. With the rise of commodities as an asset class of interest in a more inflationary world, copper stocks are being more heavily considered by traders and investors. Moreover, with climate protocols and greater global sensitivity to the use of hydrocarbons, if we do see […]

This article answers the questions of what is a stock buyback and the effects of share repurchase programs on financial metrics. What is a stock buyback program? Stock buyback programs are made by companies in order to reduce the number of shares held by the public. Given a company cannot act as its own shareholder, […]

Monte Carlo simulation is a useful tool for simulating a variety of financial events, including options pricing models. Naturally, finance and investing is a world of uncertainty, so modeling situations mathematically and simulating them through thousands of iterations is of interest in order to forecast how the situation might play out. Ultimately, it can help […]

Is it better to pick individual stocks or invest in index funds? Stock picking vs. indexing has been a classic investment debate over the past few decades. Mutual funds have been around for decades, providing broad exposure to lots of different stocks at a reasonable cost. In the 1990s, ETFs became more popular, which are […]

The concept of using a portfolio to live off dividends is considered by many to be the point at which they’ve officially “made it”. How can we turn this ideal of living off dividends into a safe and viable strategy? We’ll cover all of this in this article. Dividends and the basics of why we […]

Credit spreads are financial instruments that are used to speculatively trade credit risk. To go long credit spreads, this involves the simultaneous purchase of a high-yield credit instrument, such as a corporate bond or credit default swap (CDS), and the sale of a lower-yield credit instrument, such as a US Treasury security or CDS. Credit […]

Basis risk pertains to the risk that the basis, or the difference in price between two similar financial instruments, will change unexpectedly. This type of risk is often present when an investor is holding a position in one security while simultaneously trying to hedge against moves in another related security.   Conceptual Diagram of Basis […]

Interest rates play an important role in how a bank makes money. Interest rates influence a bank’s business both directly – i.e., driving loan, securities and deposit pricing and borrowing costs – and indirectly – i.e., impacting loan demand, default rates, and capital markets activity. Over the past more than four decades, interest rates have […]

Relative value is a concept that refers to the value of an asset in relation to the value of other assets. It is often used to compare the value of investments or to determine the fair value of an asset. In trading, relative value is used to identify opportunities to buy or sell assets based […]