Everything you need to master finance
Search 5,200+ concepts, formulas, and real-world examples. From IRR to NAV to WACC — explained like a senior analyst would.
Fund Management
3 Resources
Net Asset Value (NAV)
NAV represents the per-share value of a mutual fund or ETF, calculated by dividing the total value of all assets minus liabilities by the number of outstanding shares.
Assets Under Management (AUM)
AUM represents the total market value of assets that an investment company or fund manager manages on behalf of clients.
Distribution Waterfall
A distribution waterfall is the method by which private equity and hedge fund distributions are allocated between limited partners (LPs) and the general partner (GP) in a specific sequence.
Valuation
2 Resources
Internal Rate of Return (IRR)
IRR is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.
Discounted Cash Flow (DCF)
DCF is a valuation method that estimates the value of an investment based on its expected future cash flows, discounted to present value.
Investment Strategy
2 Resources
Active Management
Active management involves selecting investments to outperform a benchmark through research, analysis, and market timing, charging higher fees than passive strategies.
Capital Appreciation
Capital appreciation is the increase in an asset's market price over time — growth in value excluding income components like dividends or interest.
Portfolio Management
4 Resources
Alpha
Alpha measures excess return generated relative to a benchmark or risk-adjusted expected return — the value added by active management.
Asset Allocation
Asset allocation is the strategic distribution of investments across asset classes (stocks, bonds, real estate, alternatives) to balance risk and return according to investor goals.
Capital Asset Pricing Model (CAPM)
CAPM describes the relationship between systematic risk (beta) and expected return: Expected Return = Risk-Free Rate + Beta × (Market Return - Risk-Free Rate).
Correlation
Correlation measures the degree to which two securities move in relation to each other, ranging from -1 (perfect negative) to +1 (perfect positive).
Financial Ratios
2 Resources
Asset Turnover
Asset turnover measures efficiency in using assets to generate sales: Revenue / Average Total Assets. Higher indicates better asset productivity.
Debt-to-Equity Ratio
D/E compares a company's total liabilities to shareholders' equity, indicating the relative proportion of financing from debt vs. equity.
Derivatives
3 Resources
Backwardation
Backwardation occurs when futures prices are below the spot price, creating a downward-sloping curve — often due to high immediate demand or convenience yield.
Black-Scholes Model
The Black-Scholes model is a mathematical formula for pricing European-style options, considering factors like stock price, strike price, time to expiration, risk-free rate, and volatility.
Contango
Contango is a situation where futures prices for a commodity are higher than the spot price, creating an upward-sloping futures curve as maturity extends.
Risk Management
2 Resources
Beta
Beta measures a stock's sensitivity to systematic market risk — its volatility relative to the overall market (which has beta of 1.0).
Conditional Value at Risk (CVaR)
CVaR, also called Expected Shortfall, measures the average loss expected in the tail beyond the VaR threshold — the expected loss given that VaR has been exceeded.
Professional Certification
1 Resources
CFA (Chartered Financial Analyst)
The CFA designation is a globally recognized professional credential for investment management professionals, awarded by the CFA Institute.
Alternative Investments
1 Resources
Commodities
Commodities are raw materials or primary agricultural products that can be bought and sold, including energy, metals, agriculture, and livestock.
Fixed Income
3 Resources
Convexity
Convexity measures the curvature in the relationship between bond prices and yields, refining duration's linear approximation.
Credit Spread
Credit spread is the yield difference between a corporate bond and a risk-free benchmark (usually Treasury) of similar maturity, compensating for default risk.
Current Yield
Current yield is the annual income from a bond (coupon payment) divided by its current market price, ignoring capital gains/losses at maturity.
Corporate Finance
1 Resources
Cost of Equity
Cost of equity is the return required by equity investors given the risk of owning a company's shares — the opportunity cost of investing elsewhere.
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