A “conversion premium” is the premium that the holder of a convertible note receives when they convert their note into equity. The premium is calculated as the difference between the conversion price of the note and the current market price of the equity. For example, if a convertible note has a conversion price of $10 … Read more
A mandatory convertible is a type of convertible security that must be converted into shares of the underlying stock at the maturity date. The conversion is typically at a set ratio, such as 1-to-1. Mandatory convertibles are typically issued by companies that are looking to raise capital but are not able to do so through … Read more
. Debt-to-EBITDA Ratio: Definition and Calculation. What is EBITDA in simple terms? EBITDA stands for earnings before interest, taxes, depreciation, and amortization. It is a measure of a company’s financial performance that excludes these items in order to better gauge its operating cash flow. EBITDA is often used as a proxy for a company’s cash … Read more
The security market line (SML) is a graphical representation of the relationship between a security’s expected return and its risk. The SML is used to determine whether a security is undervalued or overvalued. The SML is represented as a straight line on a graph with the y-axis representing expected return and the x-axis representing risk. … Read more
A time series is a series of data points, typically consisting of successive measurements made over a time interval. The data points in a time series are often recorded at regular time intervals. A time series can be considered as a collection of random variables, which are usually indexed by time. A time series is … Read more
An event study is a type of analysis that measures the impact of an event on the price of a security. Event studies are used by investors and analysts to measure the effect of things like earnings announcements, mergers and acquisitions, and other significant events on stock prices. Event studies typically involve analyzing a stock’s … Read more
Capitalized interest is the interest that is added to the principal balance of a loan. This means that the borrower will pay interest on the interest that has been added to the loan. This can increase the amount of money that the borrower owes on the loan, and it can also increase the amount of … Read more
Cash Flow Return on Investment (CFROI) is a measure of a company’s financial performance. It is calculated by taking the company’s after-tax cash flow from operations and divided by the company’s total investment. The CFROI ratio is used to evaluate a company’s ability to generate cash flow and return on investment. A higher CFROI ratio … Read more
The Graham Number is a number that was developed by famed investor Benjamin Graham. It is a measurement of a stock’s fair value that takes into account both the company’s earnings and its book value. The Graham Number is calculated by taking the square root of the company’s earnings per share multiplied by the book … Read more
How It Works, Main Purpose, and Examples. What is Stress Testing? Stress testing is a type of testing that is done in order to determine the stability of a system or component under conditions of heavy load. This can be simulated by using special tools to generate a large number of requests, or by running … Read more
