Even though prime brokerage services have been there for a very long time, their growth in the capital markets was primarily fueled by the growth of the hedge funds industry. The prime brokerage services are utilized by hedge funds, their … Continued
PRM Exam
Common Ratios in Financial Analysis
Financial analysts use many ratios while analyzing a company. Since there are many ratios, it becomes easy to categorize them under broad categories. The following table lists the categories and the key ratios within each category. Category Description Key ratios … Continued
Risk Management Case Study: Metallgesellschaft AG (MGRM)
Background of the case This German conglomerate is owned largely by some very big banks in Germany like Deutsche Bank, Dresdner Bank to name a few as well as the Kuwait Investment Authority. The Energy group subsidiary of this conglomerate … Continued
Historical Cost Vs. Fair Value Accounting
This video provides a very basic introduction to the concept of historical cost and fair value accounting and how they differ from each other.
Case Study: Collapse of Long-Term Capital Management
Background of LTCM This article explains the causes of collapse of a major speculative Hedge Fund (Long Term Capital Management) way back in 1998. This fund was set-up by some very famous people, namely, John Meriwether from Salomon Brothers, Myron … Continued
Ten Best Practices for Excel Modeling
Being in the field of finance, we often have to perform calculations, and develop reusable models in excel. This article summarizes and compiles the best practices that I have come across in my experience with excel modeling. Following these tips … Continued
Six Components of Code of Ethics
The code of ethics must be followed by both the members of CFA Institute and the candidates seeking the CFA designation. Act with integrity and in an ethical manner Place the profession and interest of clients over personal interest. Conduct … Continued
Pay-As-You-Go Credit Default Swaps (PAUG CDS)
In case of ABS CDS, the reference asset is a specific security. Because of this, the physical settlement is impractical. At the same time, even cash settlement is complex because it is difficult to assess the market value of the … Continued
Structured Finance Security (ABS / MBS) Credit Default Swaps
Structured Finance Security CDS are credit default swaps where the underlying asset is a structured finance security such as an Asset-backed Security (ABS) or a Mortgage-backed Security (MBS). A CDS on ABS/MBS can be used to transfer the credit risk … Continued
Physical Settlement vs. Cash Settlement in Credit Default Swaps
In a credit default swap, the credit protection buyer pays a fee to the credit protection seller to protect him from the default of a reference asset. As protection, the protection sell will make the payment to the protection buyer … Continued
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