Capitalized interest is the interest that is added to the principal balance of a loan. This means that the borrower will pay interest on the interest that has been added to the loan. This can increase the amount of money that the borrower owes on the loan, and it can also increase the amount of … Read more
An event study is a type of analysis that measures the impact of an event on the price of a security. Event studies are used by investors and analysts to measure the effect of things like earnings announcements, mergers and acquisitions, and other significant events on stock prices. Event studies typically involve analyzing a stock’s … Read more
A time series is a series of data points, typically consisting of successive measurements made over a time interval. The data points in a time series are often recorded at regular time intervals. A time series can be considered as a collection of random variables, which are usually indexed by time. A time series is … Read more
The security market line (SML) is a graphical representation of the relationship between a security’s expected return and its risk. The SML is used to determine whether a security is undervalued or overvalued. The SML is represented as a straight line on a graph with the y-axis representing expected return and the x-axis representing risk. … Read more
The Delphi method is a structured technique for eliciting expert opinions, which was developed by the Rand Corporation in the 1950s. It is a widely used, although somewhat controversial, tool for forecasting and decision making in business and government. The Delphi method is based on the premise that the collective opinion of a group of … Read more
The margin of safety is the difference between the intrinsic value of a security and its market price. It is a measure of the safety of an investment, as it represents the amount by which the market price would have to fall before the investment became unprofitable. For example, if a stock has an intrinsic … Read more
A confidence interval is a range of values that is likely to contain a population parameter, such as a mean or proportion. The interval is based on a sample statistic, such as a sample mean, and is constructed so that there is a certain probability, called the confidence level, that the population parameter will fall … Read more
Functional decomposition is the process of breaking down a complex system into its component parts, or functions. This analysis is typically used to understand how a system works, or to identify potential areas for improvement. Functional decomposition can be used to understand both simple and complex systems. For example, a car can be broken down … Read more
How It Works, Main Purpose, and Examples. What is Stress Testing? Stress testing is a type of testing that is done in order to determine the stability of a system or component under conditions of heavy load. This can be simulated by using special tools to generate a large number of requests, or by running … Read more
A representative sample is important because it provides information that can be generalized to the entire population. Examples of representative samples include random samples and stratified samples.. What is a Representative Sample? A representative sample is a subset of a population that accurately reflects the characteristics of the entire population. A well-chosen representative sample allows … Read more
