What Are Cash Equivalents?

Types, Features, Examples. What are cash equivalents? Types: Features: Examples: Are debtors cash equivalents? Debtors are not cash equivalents. Cash equivalents are short-term, highly liquid investments that are easily converted to cash. Debtors are not as liquid as cash equivalents and may take longer to convert to cash. How many types of cash are there? … Read more

Swap Definition & How to Calculate Gains.

A swap is a type of derivative contract through which two parties agree to exchange one asset for another asset, usually at a specified date in the future. Swaps can be used to hedge against risk or to speculate on the movement of an underlying asset. To calculate gains on a swap, we first need … Read more

What Is a Credit Default Swap (CDS)?

A credit default swap (CDS) is a financial contract that enables the buyer to protect themselves against the risk of default on a debt instrument, usually a bond. The buyer pays a premium to the seller in exchange for this protection, and if the underlying instrument defaults, the seller pays the buyer the face value … Read more

Collateralized Debt Obligation (CDO).

A collateralized debt obligation (CDO) is a type of structured finance product that repackages and transforms a pool of assets into a new security. The pool of assets is typically made up of debt obligations, such as bonds or loans. The new security created by the CDO is then sold to investors. The cash flows … Read more

Derivative Warrants: Types and Example.

Derivative Warrants: Types and Example. What is a warrant in trading? A warrant is a security that gives the holder the right to buy or sell a underlying security at a specified price within a certain time period. Warrants are often issued by companies as a way to raise capital, and they are usually traded … Read more

Arbitrage: How It Works in Investing, With Examples.

How does arbitrage work in investing? What is the importance of arbitrage? Arbitrage is an important concept in the financial world because it helps to ensure that prices are efficient. Arbitrageurs are market participants who buy and sell securities in order to profit from price differences in different markets. By doing so, they help to … Read more