Prepayment Risk
What is prepayment risk and why is it important Prepayment risk is the risk that a borrower will repay their loan earlier than expected. This can happen for a number of reasons, such as refinancing to get a lower interest rate or selling the property. When this happens, the lender misses out on the interest payments that they would have...
Hubbert Curve
The Hubbert Curve and Its Impact on Supply Chains A symmetric logistic distribution curve is the Hubbert curve. It is a function of production rate and time and often confuses the "normal" gaussian distribution curve. This article will explain the Hubbert curve and how it is used in supply chains. It will also explore the factors that influence the predictions...
Average Propensity to Consume
What is the average propensity to consume and what factors influence it The average propensity to consume (APC) is an economic term that refers to the percentage of income that a household spends on goods and services. In other words, it is the amount of money that a family spends out of every dollar they earn. The APC can be...
Fibonacci Extensions
What are Fibonacci Extensions Fibonacci Extensions are a technical analysis tool that is used to predict areas of support or resistance. The Fibonacci Extension is based on the Fibonacci Sequence, which is a series of numbers where each number is the sum of the previous two. The Fibonacci Sequence can be applied to financial markets by looking at the price...
Holdco
What is a Holdco and what are the benefits of using one A Holdco, short for holding company, is a company that exists primarily to own other companies. Holdcos can be used for a variety of purposes, such as reducing taxes, simplifying ownership structures, and limiting liability. The benefits of using a Holdco depend on the specific circumstances, but in general,...
Volatility Skew
What is volatility skew and why should you care about it When it comes to options trading, volatility skew is an important concept to understand. In simple terms, volatility skew refers to the difference in implied volatility between puts and calls with the same strike price and expiration date. Put simply, call options tend to have higher implied volatility than...
Nonlinearity
Applications of Nonlinearity in Engineering and Finance A nonlinear system is one in which the output is not proportional to the input. Its properties make it an interesting topic for engineers, mathematicians, biologists, and physicists. In fact, nonlinearity is common to most systems. Let's look at some of the most common examples of nonlinear systems. This includes biotransformation and drug...
Hit the Bid
What is Bid shading and how does it work Bid shading is a type of auction in which the participants bid against each other to purchase an item or service. The winner of the auction is the person who offers the highest price. Bid shading can be used to purchase goods and services, or to secure a contract for work....
Grexit
Grexit Definition Grexit is a term that is used to describe the potential withdrawal of Greece from the European Union (EU). The term is a combination of the words "Greek" and "exit," and it first gained prominence during the Greek debt crisis in 2015. At that time, there was concern that Greece might be forced to leave the Eurozone, which...
Money Purchase Pension Plan
What is a Money Purchase Pension Plan (MPPP)? A money purchase pension plan (MPPP) is a type of retirement savings plan in which contributions are made by an individual or employer on behalf of the employee. The funds in the account grow tax-deferred and can be used to provide income during retirement. typically, employees are not vested in an MPPP...