Sensitivity analysis is a technique used to determine how different values of an independent variable will affect a particular dependent variable under a given set of assumptions. Sensitivity analysis is often used in financial analysis to determine how changes in key assumptions, such as interest rates or sales volume, will affect a company’s bottom line. … Read more
What is a Run Rate? A run rate is a performance metric that measures a company’s ability to generate revenue. It is typically used to assess a company’s financial health and to make predictions about its future revenue. How Does a Run Rate Work? A run rate is calculated by dividing a company’s total revenue … Read more
The Global Investment Performance Standards (GIPS) are a set of ethical principles that guide how investment firms calculate and present their investment results to clients and prospects. The standards are voluntary, but many investment firms choose to adhere to them in order to demonstrate their commitment to transparency and fair dealing. The standards are administered … Read more
What is the Present Value Interest Factor (PVIF)? The Present Value Interest Factor (PVIF) is a formula used to calculate the present value of a stream of future payments. What is Pvifa table? Pvifa table is a table which depicts the Present Value Interest Factor of Annuity. This table is used to find the present … Read more
What Is Pro Rata? Pro rata is a Latin term meaning “in proportion.” It is often used to describe how something is split up or distributed based on a percentage or proportion. For example, if you are splitting a bill equally with three other people, each person would pay one-fourth, or 25%, of the bill. … Read more
A Vested Benefit Obligation (VBO) is a measure of the retirement benefits that an employer has promised to its employees. It is the present value of all benefits that have been earned by employees as of the balance sheet date. The VBO is important because it represents a liability of the employer. The VBO must … Read more
Capital employed is a term used in business and accounting to describe the total amount of money used to finance a company’s operations. This includes money from loans, equity investments, and other sources. The capital employed can be used to finance a company’s assets, such as property, equipment, and inventory. It can also be used … Read more
The term “absolute return” refers to the actual return on an investment, without taking into account any inflation or other factors. In other words, it is the “real” return on an investment. It is important to note that absolute return is different from “relative return.” Relative return takes into account factors such as inflation and … Read more
The residual standard deviation is a measure of the dispersion of the data points around the fitted line in a regression analysis. It is calculated as the square root of the sum of the squared residuals divided by the degrees of freedom. The residual standard deviation can be used to assess the goodness-of-fit of the … Read more
A multi-factor model is a statistical model that describes the performance of a security or asset class as a function of multiple factors. The factors can be macroeconomic, fundamental, or technical in nature. The model is typically used by hedge fund managers and other active investors to generate alpha, or excess return, relative to a … Read more
