What is the variance/covariance matrix or parametric method in Value at Risk (VaR)?

July 9, 2024 No Comments

A: The parametric method, also known as the variance-covariance method, is a risk management technique for calculating the value at risk of a portfolio of assets. The value at risk is a statistical risk management technique measuring the maximum loss that an investment portfolio is

What is the weighted average of outstanding shares? How is it calculated?

July 9, 2024 No Comments

A: The amount of shares outstanding in a company will often change due to a company issuing new shares, repurchasing and retiring existing shares, and other financial instruments such as employee options being converted into shares. The weighted average of outstanding shares is a calculation

What is the Zig Zag Indicator formula and how is it calculated?

July 9, 2024 No Comments

A: The zig zag indicator is a basic tool that analysts use to find out when a security’s trend is reversing. By determining the support and resistance areas, it helps to identify significant changes in price while filtering out short-term fluctuations, thus eliminating the noise

What items on the balance sheet are most important in fundamental analysis?

July 9, 2024 No Comments

A: Fundamental analysts normally start by examining the balance sheet. This is because the balance sheet is a snapshot of the company’s assets and liabilities at a single point in time, not spread over the course of a year such as with the income statement.

What kinds of topics does microeconomics cover?

July 9, 2024 No Comments

A: Microeconomics is the study of human action and interaction. The most common uses of microeconomics deal with individuals and firms that trade with one another, but its methods and insights can be applied to nearly every aspect of purposeful activity. Ultimately, microeconomics is about

What is the formula for calculating return on equity (ROE) in Excel?

July 9, 2024 No Comments

A: The return on equity, or ROE, is used in fundamental analysis to measure a company’s profitability. The formula to calculate a company’s ROE is its net income divided by shareholders’ equity. ROE determines the amount of net income a company generates with its shareholders’

What is the formula for calculating return on investment (ROI) in Excel?

July 9, 2024 No Comments

A: Return on investment (ROI) is a calculation that shows how an investment or asset has performed over a certain period. It expresses gain or loss in percentage terms. The formula for calculating ROI is simple: (Current Value – Beginning Value) / Beginning Value = ROI

What is the formula for calculating the current ratio?

July 9, 2024 No Comments

A: The current ratio is a metric used by the finance industry to assess a company’s short-term liquidity. It reflects a company’s ability to generate enough cash to pay off all debts should they become due at once. While this scenario is highly unlikely, the ability of a

What is the formula for calculating the internal rate of return (IRR)?

July 9, 2024 No Comments

A: Computing the internal rate of return (IRR) for a possible investment is time-consuming and inexact. IRR calculations must be performed via guesses, assumptions, and trial and error. Essentially, an IRR calculation begins with two random guesses at possible values and ends with either a

What is the formula for calculating the inventory turnover ratio in Excel?

July 9, 2024 No Comments

A: The inventory turnover ratio is used in fundamental analysis to determine the amount of times a company sells and replaces its inventory over a fiscal period. The inventory turnover ratio compares a company’s sales and its inventory. To calculate a company’s inventory turnover, divide

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