The most comprehensive educational resources for finance

What are Corporate Bonds

Corporate bonds are bonds issued by corporations in order to raise money for their business. It is one of the major sources of financing by corporates after bank borrowing. The term corporate bonds is generally used for secured debt which is backed by collateral. The collateral can be real estate, plant and machinery, or even

CFA Vs. FRM: Which Designation is Right for You?

This is one of the most commonly debated questions among students who have made up their mind about furthering their career and adding a designation such as CFA, FRM, or CAIA to their name. Making the right choice can be crucial for a couple of reasons: 1) Each of these certifications are expensive, for example,

CFA Level 1 – Exam Preparation Guide

If you are a CFA Level 1 exam candidate, this guide will provide you all the information you need to prepare and pass the exam. The Chartered Financial Analyst (CFA®) is one of the most desired designations for investment professionals and financial analysts. The CFA designation has wide acceptance in the industry and can significantly

Sample Study Notes from CFA Level I Authority

The response for CFA Level I Authority, our comprehensive CFA Level I self-study program has been really great. Some of you asked for sample notes from Authority. So here it is… We are sharing study notes for three readings listed below: Reading 5: Time Value of Money Reading 24: Financial Reporting Standards Reading 37: Cost

Accounting Profit Vs. Economic Profit

Accounting Profit We generally look at profits from accounting perspective. From the perspective of an accountant, profit is the difference between total revenue and total actual expenses incurred by the firm’s actors of production. These are the explicit costs incurred by the firm. Explicit costs are the monetary payments to resource owners. Accounting Profits =

Substitution and Income Effects

We earlier learned about the impact of changes in income and prices individually on the budget constraint ad demand of products. We will now study this in more detail. The change in quantity demanded due to price change can be decomposed into substitution effect and income effect. When the price of a commodity decreases, two

Consumer’s Equilibrium Bundle of Goods

We know that an individual will chose a bundle of goods that provide him the maximum utility from all the available choices. Based on the income and prices of products the choices available to the individual constitute the budget set. We can combine the indifference curve for the individual along with his budget constrain to

Budget Constraints

We learned that indifference curve shows the bundle of goods that provide same utility to an individual and an individual will always want to maximize the utility. However, most people are constrained by their income while making their choices. The budget constraint measures the combinations of purchases that a person can afford to make with

Consumer Choice Theory and Utility Theory

We assume that people understand the choices available to them and the prices associated with each choice. They consider the alternatives available to them and choose the best based on their preferences. When people have choices, it is possible to find the consumers preference for various products. Given a set of alternative products, we can

Interpreting Forward Exchange Rate Quotes

Forward exchange rate contracts trade at premiums or discounts to the spot rate. These premiums and discounts are useful insights for analysts to gauge what to expect from the market, and which currencies are expected to appreciate and which ones are expected to depreciate. The forward exchange rates are quoted in terms of points. For