In this article, Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management, 2021-2023) presents the Russell 2000 index and details its characteristics. The Russell 2000 index As we can already notice in the name, Russell 2000 Index is a stock market index that tracks the performance of 2,000 small-cap companies in the … Read more
In this article, Lokendra RATHORE (ESSEC Business School, Master in Strategy & Management of International Business (SMIB), 2022-2023) explains the Good-til-Cancelled (GTC) order and the Immediate-or-Cancel (IOC) used to trade in financial markets. In addition to the types of orders that we discussed in Period1 of the SimTrade certificate (market orders, limit orders, best limit … Read more
In this article, Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management, 2021-2023) presents the NASDAQ index and details its characteristics. The NASDAQ index NASDAQ was first founded in 1971 and it is an American stock exchange. By market capitalization of shares traded it is the second-largest stock exchange in the world … Read more
The DJIA index In this article, Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management, 2021-2023) presents the Dow Jones Industrial Average (DJIA) index and details its characteristics. The DJIA index The Dow Jones Industrial Average (DJIA) index was created on May 26, 1896, by Charles Dow and Edward Jones, the co-founders … Read more
In this article, Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management, 2021-2023) explains float and its use in the construction financial indexes. What is Float? The term “float” (sometimes mentioned as “free float”) refers to the quantity of shares that are readily tradable in financial markets. The float is defined as … Read more
In this article, Federico MARTINETTO (ESSEC Business School, Exchange Global BBA, 2021) comments on a quote from Gordon Gekko in the famous Wall Street film. Quote: Money never sleeps The quote “Money never sleeps” is a famous line from the 1987 film “Wall Street” and has become a popular saying in popular culture. The phrase … Read more
The investment ecosystem In this article, Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management, 2021-2023) explains the investment ecosystem in financial markets. Introduction In the investment ecosystem, there are several blocks to understand: market participants, market products, and market organization. Market participants Market participants are individuals, companies, financial institutions, and governments. … Read more
In this article, Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management, 2021-2023) presents the S&P 500 index and details its characteristics. The S&P 500 index The performance of 500 major capital companies listed on the US stock exchange is summarized by a financial index called the S&P 500 index. The stocks … Read more
In this article, Nithisha CHALLA (ESSEC Business School, Grande Ecole Program – Master in Management, 2021-2023) explains the calculation of financial indexes. Introduction A stock market index keeps tabs on the gains and losses made by a specific selection of stocks or other assets. In other words, the index determines how share prices for various … Read more
In reality, individuals cannot directly access the market to buy or sell financial assets such as stocks or currencies. They must go through intermediaries responsible for transmitting their clients’ orders to the market. It may be a bank, but since the early 2000s, specialized institutions have developed on the internet: online brokers. What criteria should … Read more
In this article, Martin VAN DER BORGHT (ESSEC Business School, Master in Finance, 2022-2024) explains the activity of market making which is key to bring liquidity in financial markets. Market Making: What is It and How Does It Work? Market making is a trading strategy that involves creating liquidity in a security by simultaneously being … Read more
In this article, Martin VAN DER BORGHT (ESSEC Business School, Master in Finance, 2022-2024) exposes the results of various studies concerning IPO underpricing. What is IPO Underpricing? Underpricing is estimated as the percentage difference between the price at which the IPO shares were sold to investors (the offer price) and the price at which the … Read more
In this article, Martin VAN DER BORGHT (ESSEC Business School, Master in Finance, 2022-2024) explains the key financial concept of market efficiency. What is Market Efficiency? Market efficiency is an economic concept that states that financial markets are efficient when all relevant information is accurately reflected in the prices of assets. This means that the … Read more
In this article, Youssef LOURAOUI (Bayes Business School, MSc. Energy, Trade & Finance, 2021-2022) discusses the notion of hedge fund diversification by analyzing the paper “Hedge fund diversification: how much is enough?” by Lhabitant and Learned (2002). This article is organized as follows: we describe the primary characteristics of the research paper. Then, we highlight … Read more
In this article, Youssef LOURAOUI (Bayes Business School, MSc. Energy, Trade & Finance, 2021-2022) presents the managed futures strategy (also called CTAs or Commodity Trading Advisors). The objective of the managed futures strategy is to look for market trends across different markets. This article is structured as follow: we introduce the managed futures strategy principle. … Read more
In this article, Youssef LOURAOUI (Bayes Business School, MSc. Energy, Trade & Finance, 2021-2022) presents the dedicated short bias strategy. The strategy holds a net short position, which implies more shorts (selling) than long (buying) positions. The objective of the dedicated bias strategy is to profit from shorting overvalued equities. This article is structured as … Read more
In this article, Youssef Louraoui (Bayes Business School, MSc. Energy, Trade & Finance, 2021-2022) discusses the concept of hedging and its application in the crude oil market. This article is structured as follow: we introduce the concept of hedging in the first place. Then, we present the mathematical foundation of the Minimum Variance Hedging Ratio … Read more
Modeling of the crude oil price In this article, Youssef LOURAOUI (Bayes Business School, MSc. Energy, Trade & Finance, 2021-2022) models the market price of the crude oil. This article is structured as follows: we introduce the crude oil market. Then, we present the mathematical foundations of Geometric Brownian Motion (GBM) model. We use this … Read more
Fixed-income arbitrage strategy In this article, Youssef LOURAOUI (Bayes Business School, MSc. Energy, Trade & Finance, 2021-2022) presents the fixed-income arbitrage strategy which is a well-known strategy used by hedge funds. The objective of the fixed-income arbitrage strategy is to benefit from trends or disequilibrium in the prices of fixed-income securities using systematic and discretionary … Read more
In this article Akshit GUPTA (ESSEC Business School, Grande Ecole Program – Master in Management, 2019-2022) shares his apprenticeship experience as a client services analyst at BNP Paribas, which is the leading European banking group. Introduction BNP Paribas is a French banking group which was formed as a result of a merger between Banque Nationale … Read more