Blog Posts

Measuring performance is essential for assessing the effectiveness of a strategy and guiding future decisions. Two common methods used for this purpose are absolute return and relative return. Each approach provides distinct information about an investment or portfolio’s performance. Below we look into the differences between absolute return and relative return, discussing their respective definitions, […]

What Is the Time Value of Money? The time value of money (TVM) is the concept that money you have now is worth more than the same amount of money in the future. This is because the money that you have now can be invested and grow over time. The time value of money is […]

The Mutual Fund Separation Theorem (MFST) is a concept in portfolio theory that has impacted the way traders/investors approach portfolio construction and management. The theorem posits that under specific conditions, market participants can optimize their portfolios by investing in a select number of mutual funds and risk-free assets, rather than purchasing a larger number of […]

Liquidity is a fundamental concept in economics and finance that plays a significant role in the smooth functioning of the global economy. It refers to the ease and speed with which assets can be converted into cash or the ability to meet financial obligations without incurring significant losses. A proper understanding of liquidity is essential […]

Derivatives have a long and complex history that traces back to ancient civilizations. These financial instruments have evolved significantly over time and have become an important tool for managing risk, hedging investments, and even speculating on market movements. We’ll take a look at the evolution of derivatives from ancient cultures to the modern era, highlighting […]

The history of money is a fascinating subject that spans thousands of years, starting from the simple barter system of ancient Mesopotamia to the payment systems of today. In this article, we look at the evolution of money, focusing on its various forms and systems, the theories behind its development, and its impact on societies […]

Over-investing is a common phenomenon in personal finance, particularly when dealing with assets that serve both as investment goods and consumption goods. This behavior can lead to spending more on an asset than its true market value and can have financial consequences. In this article, we’ll look into the concept of over-investing, its causes, and […]

The Cox-Ingersoll-Ross (CIR) Model is a short-rate mathematical model used in finance to describe the evolution of interest rates over time. Developed by John C. Cox, Jonathan E. Ingersoll Jr., and Stephen A. Ross in 1985, the CIR model is one of the most widely used interest rate models in the finance industry. Its primary […]

The Vasicek Model, named after its creator Oldrich Vasicek, is a popular short-rate mathematical model used in finance to predict interest rates. First published in 1977, it was one of the first models to describe the evolution of interest rates using stochastic calculus. The model’s primary purpose is to capture the mean-reverting behavior of interest […]

A short-rate model, in the context of interest rate derivatives, is a mathematical model that describes the future evolution of interest rates by describing the future evolution of the short rate. In finance, the short rate represents the instantaneous interest rate applicable for a very short period. It’s often called the “cash rate,” “repo rate,” […]