In this article, Youssef LOURAOUI (ESSEC Business School, Global Bachelor of Business Administration, 2017-2021) presents the origin of factor investing. A factor is defined as a persistent driver that helps explain assets’ long-term risk and return properties across asset classes. This article is structured as follows: we begin by presenting Markowitz’s Modern Portfolio Theory (MPT) … Read more
In this article, Jayati WALIA (ESSEC Business School, Grande Ecole Program – Master in Management, 2019-2022) presents the Capital Asset Pricing Model (CAPM). Introduction The Capital Asset Pricing Model (CAPM) is a widely used metrics for the financial analysis of the performance of stocks. It shows the relationship between the expected return and the systematic … Read more
In this article, Jayati WALIA (ESSEC Business School, Grande Ecole Program – Master in Management, 2019-2022) explains the Brownian motion and its applications in finance to model asset prices like stocks traded in financial markets. Introduction Stock price movements form a random pattern. The prices fluctuate everyday resulting from market forces like supply and demand, … Read more
In this article, Youssef LOURAOUI (ESSEC Business School, Global Bachelor of Business Administration, 2017-2021) presents the growth factor, which is based on a risk factor that aims to get exposure to firms with high growth potential based on a variety of parameters such as historical profits, sales, and expected earnings. This article is structured as … Read more
In this article, Youssef LOURAOUI (ESSEC Business School, Global Bachelor of Business Administration, 2017-2021) presents the quality factor, which is based on a risk factor that aims to get exposure to businesses with long-term business plans and competitive advantages. This article is structured as follows: we begin by defining the quality factor and reviewing academic … Read more
In this article, Youssef LOURAOUI (ESSEC Business School, Global Bachelor of Business Administration, 2017-2021) presents the yield factor, which is based on a risk factor that aims to get exposure to companies that are regarded to be inexpensive and have a history of consistent and rising dividends. This article is structured as follows: we … Read more
In this article, Youssef LOURAOUI (ESSEC Business School, Global Bachelor of Business Administration, 2017-2021) presents the value factor, which is based on a risk factor that aims to get exposure to undervalued firms in relation to their industry competitors in order to benefit from the potential upside. This article is structured as follows: we begin … Read more
This article written by Akshit GUPTA (ESSEC Business School, Grande Ecole Program – Master in Management, 2019-2022) presents the Black-Scholes-Merton Model . Introduction Options are one of the most popular derivative contracts used by investors to hedge the risks of their portfolios, to optimize the risk profile of their positions and to make profits (or … Read more
This article written by Akshit GUPTA (ESSEC Business School, Master in Management, 2019-2022) presents the subject of call-put parity. Introduction The call-put parity (also written the put-call parity) is a concept introduced in the 1960s by the economist Hans R. Stoll in a paper named “The Relationship Between Put and Call Option Prices”. The call-put … Read more
This article written by Akshit GUPTA (ESSEC Business School, Master in Management, 2019-2022) presents the technical subject of theta, an option Greek used in option pricing and hedging to deal with he passing of time. Introduction Theta is a type of option Greek which is used to compute the sensitivity or rate of change of … Read more
This article written by Akshit GUPTA (ESSEC Business School, Grande Ecole Program – Master in Management, 2019-2022) explains the technical subject of vega, the option Greek used in option pricing and hedging to take into account the volatility of the underlying asset. Introduction Vega is a type of option Greek which is used to compute … Read more
Cash flow statement In this article, Bijal GANDHI (ESSEC Business School, Grande Ecole Program – Master in Management, 2019-2022) explains the meaning of cash flow statement. This read will help you understand in detail the meaning, structure, components of cash flow statement along with relevant examples. Cash Flow statement The cash flow statement is one … Read more
In this article, Bijal GANDHI (ESSEC Business School, Master in Management, 2019-2022) explains the difference between operating and non-operating revenue. This read will help you understand in detail various terminologies related to revenue and income statement. What is operating revenue? The revenue generated from the primary or core activities of a company is referred to … Read more
This article written by Akshit GUPTA (ESSEC Business School, Grande Ecole Program – Master in Management, 2019-2022) presents the technical subject of gamma, an option Greek used in option hedging. Introduction Gamma is a type of option Greek which is used to compute the sensitivity or rate of change of delta (Δ) of an option … Read more
This article written by Akshit GUPTA (ESSEC Business School, Grande Ecole Program – Master in Management, 2019-2022) presents the technical subject of delta, an option Greek used in option pricing and hedging. Introduction Option Greeks are sophisticated financial metric used by trader to calculate the sensitivity of option contracts to different factors related to the … Read more
In this article, Alexandre VERLET (ESSEC Business School, Master in Management, 2017-2021) explains why financial markets invented options and how they function. A historical perspective on options The history of options is surrounded by legends.. This story is linked to human’s desire to control the unpredictable, sometimes to protect himself from it, often to profit … Read more
In this article, Alexandre VERLET (ESSEC Business School, Grande Ecole Program – Master in Management, 2017-2021) goes back on the inflation issue of 1970’s/1980’s and the lessons it teaches us for the 2020’s. In the developed capitalist countries, the fight against inflation became the top priority of economic policy in the 1970s. Georges Pompidou’s famous … Read more
In this article, Anant JAIN (ESSEC Business School, Grande Ecole Program – Master in Management, 2019-2022) talks about Impact Investing. Introduction Impact investing is defined as the investment process made with the intention to generate positive social and environmental impact that can be measured, along with positive financial performance. The main point of impact investing … Read more
Operating Profit In this article, Bijal GANDHI (ESSEC Business School, Grande Ecole Program – Master in Management, 2019-2022) explains the concept of Operating profit. This read will help you understand in detail the meaning, components and formula for calculating operating profit along with relevant examples. Operating Profit Operating profit refers to the profit obtained from business … Read more
Revenue In this article, Bijal GANDHI (ESSEC Business School, Grande Ecole Program – Master in Management, 2019-2022) delves deeper into the accounting concept of revenue. This read will help you understand in detail the meaning, types and calculation of revenue along with relevant examples. What is revenue? Revenue is referred to the money brought into a company … Read more
