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Distributable Net Income: Definition, Calculation, Formula, Example

Posted on March 24, 2024 By 
When it comes to trusts and beneficiaries, distributable net income plays a major role. It is essentially the amount of income that can be distributed to beneficiaries without incurring additional tax liabilities. It is a base amount that is used to calculate the trust’s tax liability and determine how much …
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Information Content of Leveraged ETFs Options

Posted on March 22, 2024 By 
Leveraged ETFs, or exchange-traded funds, are investment funds designed to amplify the returns of an underlying index or asset class through the use of financial derivatives and debt. These ETFs aim to achieve returns that are a multiple of the performance of the index they track, typically two or three …
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Daily Trading Limit

Posted on March 21, 2024 By 
In the world of finance, the concept of the daily trading limit plays a crucial role in maintaining stability and preventing extreme volatility in the markets. Let’s delve into what daily trading limits are, their purposes, how they work, and some criticisms surrounding their implementation. What is the Daily Trading …
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Perfect Competition: Definition, Market, Meaning, Example, Graph

Posted on March 20, 2024 By 
Perfect competition is used to describe a market structure in which businesses only make just enough profit to keep running. It is considered the most ideal market structure because it leads to the efficient allocation of resources and benefits both consumers and producers. Perfect competition often gets overlooked because no …
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A Pricing Model for Earthquake Bonds

Posted on March 18, 2024 By 
A catastrophe bond, commonly referred to as a cat bond, is a type of insurance-linked security that allows insurers and reinsurers to transfer the risk associated with catastrophic events, such as natural disasters, to capital market investors. These bonds are typically issued by insurance companies or special purpose vehicles (SPVs) …
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Can We Predict a Market Correction?

Posted on March 14, 2024 By 
A market correction in the equity market refers to a downward movement in stock prices after a sustained period of growth. Market corrections can be triggered by various factors such as economic indicators, changes in investor sentiment, or geopolitical events. During a correction, stock prices may decline by a certain …
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Market Ecology and the Role of Trading Strategy Diversity in Market Stability

Posted on March 10, 2024 By 
Market ecology refers to the complex interplay and dynamics among various participants, assets, and factors within financial markets. Just like in natural ecosystems, different entities in the market interact with each other, creating a delicate balance that can affect asset prices, trading volumes, and market volatility. Market ecology theory views …
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Quantifying Stocks Lead-Lag Relationships

Posted on March 6, 2024 By 
The lead-lag relationship between stocks refers to the phenomenon where the movement of one stock precedes or lags behind the movement of another stock. This relationship is often analyzed in the context of stock returns and can provide valuable insights into market dynamics and investor behavior. For instance, if Stock …
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Impact of Zero DTE Options on the Market

Posted on March 2, 2024 By 
Zero DTE (0DTE) options, also known as “same-day expiration” options, are financial derivatives with expiration dates on the same day they are traded. These options offer traders the opportunity to profit from short-term price movements in the underlying asset. Due to their extremely short time frame, zero DTE options are …
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