The most comprehensive educational resources for finance

Nine Facts about Working on Wall Street

The crashes, the rises, the colorful fund managers, the rags to riches stories and the riches to rags stories make Wall Street one of the most interesting and colorful places in the world to work in. Ask any aspiring investment manager his dream destination and it has to be Wall Street. The stories of infamy

Pricing Anomalies: Cross Sectional Anomalies

Cross sectional anomalies can be categorized into two groups, namely, Value Effect and Size Effect. Value Effect Several studies in markets across the world have yielded the following results. Stocks with below average price-to-earnings and market-to-book ratios have consistently outperformed growth stocks over a period of time. This is a contradiction of the semi-strong efficient

Pricing Anomalies: Calendar, Momentum and Overreaction Anomalies

Efficient markets reflect any new information in the prices of the securities that are traded. However, there are from time to time anomalies in the system that leads to a mispricing of the securities. They are not one off phenomenon but a persistent pattern that buckles the tenants of an efficient market system. For an

Types of Efficient Markets

Eugene Fama in 1970 introduced the forms of efficient markets in the Journal of Finance. Titled “Efficient Capital Markets: A Review of Theory and Empirical Work”, this seminal article outlines the capital markets. He states markets function in three formats: Weak Semi-strong Strong The forms are described with respect to available information that is reflected

Market Efficiency: Influencers

Efficient markets assimilate information that gets reflected in trades. Any new information in efficient markets is adjusted quickly. In reality most markets are neither fully efficient nor fully inefficient. They demonstrate various degrees of efficiency along a continuum between the opposing points of efficiency and inefficiency. The asset prices better reflect information more quickly and

An Overview of Efficient Markets

A wind vane that moves with the slightest movement in breeze is a good representation of an efficient market. A market that quickly accepts and integrates any new information related to assets is called an informationally efficient market or efficient market. In an ideal efficient market the asset price will reflect all past and present

Financial Intermediaries and Investor Positions in Equity Markets

This video on Equity Market Organization and Structure provides an overview of the financial intermediaries and the different types of investor positions in the equity markets as a part of the CFA Level 1 syllabus. The video covers: Financial Intermediaries Investor Positions

Financial System and Investment Landscape

This video on Equity Market Organization and Structure provides an overview of the equity markets as a part of the CFA Level 1 syllabus. The video covers: Six main purposes of financial system Function of financial system Classification of Assets and Markets Types of Investments

Trade Execution Systems

In the securities markets there are different systems used to match the orders of different buyers and sellers. These are called the execution mechanisms in the market, and the markets are classified based on the execution system that they use. There are three main types of markets: quote-driven markets, order-driven markets, and brokered markets. Some

Call Market Vs. Continuous Trading Market

The trading activity in a securities exchange is typically organized in one of the following two ways: Call Markets In a call market the market is called at a certain time and place and all the traders trade at that time. The time when the market is called is called a trading session. Due to