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The Tail Value at Risk (TVaR) is a financial measure of a potential loss in a portfolio. Tail Value at risk uses the same statistical principles as the traditional value at risk with the only difference being that it measures an expectation of the remaining potential loss given a probability level has occurred. Conceptually, tail…

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For a time, it was widely believed that the only way to determine how good an investment is, was by looking at its return. But in recent years, investors have come to realize that a high return doesn’t always equal a good investment. For example: if one company has a higher return than another but…

Read More What is Risk-Adjusted Return on Capital (RAROC)

It’s an important distinction to be made in the world of finance. Earnings at risk are when a company’s future earnings are threatened due to factors such as unfavorable economic conditions or changes in consumer tastes. Cash flow at risk, on the other hand, is when a company’s current cash flow is threatened by factors…

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In recent years, ESG (environmental, social, and governance) risks have received increased attention from investors due to the growing awareness of the impact these issues can have on their investments. Regulators are also increasingly requiring companies to disclose them in annual reports. Investors who want to assess ESG risks should develop a framework for evaluating…

Read More How to Assess Environmental, Social, and Governance (ESG) Risks

In the past, there was a global trend for investors to seek out low-risk investment opportunities. However, this has changed in recent years with many investors looking at higher-risk investments as a way of generating more returns on their capital. This is especially true when considering political risk in investment. Investors are now keenly aware…

Read More What are Political Risks?

What is a Promissory Note? A promissory note is a document or statement containing a promise from one party to another. This note states that the note’s issuer will pay a predefined sum of money to the noteholder. Usually, it also includes the maturity date or the date on which this transaction will occur. However,…

Read More Promissory Note: Definition and Examples