The Perils of the Immediacy Trap and Why we can and cannot do without it
February 12, 2025
What is Stress Testing? Stress testing is a type of simulation model which is used to manage risks in banks and other financial institutions. As a part of stress testing, various mathematical and analytical techniques are deployed to understand how an organization would react to adverse outcomes in the external environment. Stress testing is useful […]
Commercial banking has traditionally been a relationship-driven business. This meant that the business was primarily driven by human-to-human contact. Over the years, banks have acquired the capability to store large quantities of data and then mine the data in order to discover meaningful trends. There are many modern software tools that allow banks to use […]
The Internal Rate of Return (IRR) is another very important metric that can be used to determine whether or not a company must invest its resources in a project. If the company does decide to invest its resources in all the projects then the IRR can help us understand what should be the priority of […]
Return on Equity (ROE) is probably the most important number in the financial universe. Every company is driven by profit and Return on Equity (ROE) is considered to be the best indicator of the profitability of a company. Debt holders just want to get their interest and principle back i.e. they will obtain a fixed […]
Equity valuation is usually conducted for an entire enterprise. For instance, if we are trying to come up with a valuation for Apple Inc, we will usually consider Apple Inc as being one single indivisible unit. This is because the cash flows that will accrue to Apple Inc are intertwined and all of the cash […]
A market is a place where two parties are involved in transaction of goods and services in exchange of money. The two parties involved are:
In a market the buyer and seller comes on a common platform, where buyer purchases goods and services from the seller in exchange of money.
A place where individuals are involved in any kind of financial transaction refers to financial market. Financial market is a platform where buyers and sellers are involved in sale and purchase of financial products like shares, mutual funds, bonds and so on.
Let us go through the various types of financial market:
A market where individuals invest for a longer duration i.e. more than a year is called as capital market. In a capital market various financial institutions raise money from individuals and invest it for a longer period.
Capital Market is further divided into:
Commodity market like any other market includes a buyer and a seller. In such a market buyer purchases raw products like rice, wheat, grain, cattle and so on from the seller at a mutually agreed rate.
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