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Author: Bill Campbell
Yield Measures (Quant)
There are a variety of conventions for measuring the yield (or return) on an investment; you need to know the definitions of each of these yield measures and how to convert from one yield measure to another (to facilitate comparison of various investments). The measures of interest are: Bank Discount Yield (BDY, or rBD) Holding…
FRAs
A forward rate agreement (FRA) is essentially an agreement to enter into two loans (one long, one short) in the future: a fixed-rate loan and a floating-rate loan. (The difference between an FRA and an actual agreement to enter into these two loans is that the FRA will be settled at the beginning of the…
Is This Answer Reasonable?
In many of the topics in the Level I CFA curriculum you are required to calculate a numerical answer: You have to calculate an NPV in Quantitative Methods or Corporate Finance You have to calculate the yield of a bond in Fixed Income You have to calculate a forward interest rate in Fixed Income and…
IS/LM: Deriving Aggregate Demand
There are four articles on IS/LM: Synopsis Part 1: the IS curve Part 2: the LM curve Part 3: combining the IS and LM curves
Cash Conversion Cycle
The definition of the cash conversion cycle (CCC) is easiest to remember if you draw a timeline of events surrounding inventory and sales. There are four events of interest: The day that you purchase the inventory; we’ll assume that you buy it on credit – creating accounts payable – and pay for it at a…
IS/LM: Deriving Aggregate Demand (Synopsis)
One of the more complicated ideas in economics is the development of the aggregate demand curve via two other curves: the IS (Investment-Savings) curve and the LM (Liquidity preference-Money supply) curve. I’ll break it down into four articles: Synopsis (you are here) Part 1: the IS curve Part 2: the LM curve Part 3: combining…
IS/LM: Deriving Aggregate Demand (Part III: Combining the IS and LM Curves)
There are four articles on IS/LM: Synopsis Part 1: the IS curve Part 2: the LM curve Part 3: combining the IS and LM curves (you are here) Combining the IS and LM Curves Because the IS curve and the LM curves each have real GDP (= real aggregate income) on the horizontal axis and…
IS/LM: Deriving Aggregate Demand (Part II: the LM Curve)
There are four articles on IS/LM: Synopsis Part 1: the IS curve Part 2: the LM curve (you are here) Part 3: combining the IS and LM curves The LM Curve The key to understanding the Liquidity preference-Money supply (LM) curve is realizing that the underlying assumption is that financial markets are in equilibrium: demand…
IS/LM: Deriving Aggregate Demand (Part I: the IS Curve)
There are four articles on IS/LM: Synopsis Part 1: the IS curve (you are here) Part 2: the LM curve Part 3: combining the IS and LM curves The IS Curve There are several steps in creating the Investment-Savings (IS) curve, which has real aggregate income on the horizontal axis and real interest rate on…
Level III – Equity Portfolio Management
I’m still working on Level III Equity Portfolio Management articles; as I finish them I’ll list them here. If you’d like to see specific articles on Level III Equity Portfolio Management, just ask. [menu name = “Level III Equity Portfolio Management Articles”]