Outline Of Finance

Short description: Overview of finance and finance-related topics

The following outline is provided as an overview of and topical guide to finance:

Finance – addresses the ways in which individuals and organizations raise and allocate monetary resources over time, taking into account the risks entailed in their projects.

Overview

The term finance may incorporate any of the following:

The study of money and other assets
The management and control of those assets
Profiling and managing related risks

Fundamental financial concepts

Finance
- Arbitrage
- Capital (economics)
- Capital asset pricing model
- Cash flow
- Cash flow matching
- Debt
  - Default
  - Consumer debt
  - Debt consolidation
  - Debt settlement
  - Credit counseling
  - Bankruptcy
  - Debt diet
  - Debt-snowball method
  - Debt of developing countries
- Asset types
  - Real estate
  - Securities
  - Commodities
  - Futures
  - Cash
- Discounted cash flow
- Financial capital
  - Funding
- Entrepreneur
  - Entrepreneurship
- Fixed income analysis
- Gap financing
- Global financial system
- Hedge
  - Basis risk
- Interest rate
  - Risk-free interest rate
  - Term structure of interest rates
- Short-rate model
  - Vasicek model
  - Cox–Ingersoll–Ross model
  - Hull–White model
  - Chen model
  - Black–Derman–Toy model
- Interest
  - Effective interest rate
  - Nominal interest rate
  - Interest rate basis
  - Fisher equation
  - Crowding out
  - Annual percentage rate
  - Interest coverage ratio
- Investment
  - Foreign direct investment
  - Gold as an investment
  - Over-investing
- Leverage
- Long
- Liquidity
- Margin
- Mark to market
- Market impact
- Medium of exchange
- Microcredit
- Money
  - Money creation
  - Currency
  - Coin
  - Banknote
  - Counterfeit
  - History of money
  - Monetary reform
- Portfolio
  - Modern portfolio theory
  - Mutual fund separation theorem
  - Post-modern portfolio theory
- Reference rate
  - Reset
- Return
  - Absolute return
  - Investment performance
  - Relative return
- Risk
  - Financial risk
  - Risk management
    - Financial risk management
    - Uncompensated risk
  - Risk measure
    - Coherent risk measure
    - Deviation risk measure
    - Distortion risk measure
    - Spectral risk measure
    - Value at risk
      - Expected shortfall
      - Entropic value at risk
- Scenario analysis
- Short
- Speculation
  - Day trading
- Position trader
- Spread trade
- Standard of deferred payment
- Store of value
- Time horizon
- Time value of money
  - Discounting
  - Present value
  - Future value
  - Net present value
  - Internal rate of return
  - Modified internal rate of return
  - Annuity
  - Perpetuity
- Trade
  - Free trade
  - Free market
  - Fair trade
- Unit of account
- Volatility
- Yield
- Yield curve

History

History of finance
History of banking
History of insurance
Tulip mania (Dutch Republic), 1620s/1630s
South Sea Bubble (UK) & Mississippi Company (France), 1710s; see also Stock market bubble
Vix pervenit 1745, on usury and other dishonest profit
Panic of 1837 (US)
Railway Mania (UK), 1840s
Erie War (US), 1860s
Long Depression, 1873–1896 (mainly US and Europe, though other parts of the world were affected)
Post-World War I hyperinflation; see Hyperinflation and Inflation in the Weimar Republic
Wall Street Crash of 1929
Great Depression 1930s
Bretton Woods Accord 1944
1973 oil crisis
1979 energy crisis
Savings and Loan Crisis 1980s
Black Monday 1987
Asian financial crisis 1990s
Dot-com bubble 1995-2001
Stock market downturn of 2002
United States housing bubble
Financial crisis of 2007–08, followed by the Great Recession

Finance terms by field

Accounting (financial record keeping)

Auditing
Accounting software
Book keeping
FASB
Financial accountancy
- Financial statements
  - Balance sheet
  - Cash flow statement
  - Income statement
Management accounting
Philosophy of Accounting
Hedge accounting
- IFRS 9
- Fair value accounting

Banking

See articles listed under: Bank § See also

Corporate finance

Balance sheet analysis
- Financial ratio
Business plan
- Investment policy
  - Business valuation
  - Stock valuation
  - Fundamental analysis
  - Real options
  - Valuation topics
  - Fisher separation theorem
- Sources of financing
- Securities
- Debt
- Initial public offering
- Capital structure
- Cost of capital
  - Weighted average cost of capital
  - Modigliani–Miller theorem
  - Hamada's equation
- Dividend policy
  - Dividend
  - Dividend tax
  - Dividend yield
  - Modigliani–Miller theorem
Corporate action
(Strategic) Financial management
- Capital management
  - Capital budgeting
  - Working capital
    - Current assets
    - Current liabilities
- Managerial finance
- Management accounting
Mergers and acquisitions
- Leveraged buyout
- Takeover
- Corporate raid
- Contingent value rights
Real options
- Return on investment
  - Return on capital
  - Return on assets
  - Return on equity
- Loan covenant
- Cash conversion cycle
- Cash management
  - Strategic financial management § Cash management
- Inventory optimization
  - Supply chain management
  - Just In Time (JIT)
  - Economic order quantity (EOQ)
  - Economic production quantity (EPQ)
  - Economic batch quantity
- Credit (finance)
- Credit scoring
- Default risk
- Discounts and allowances
- Factoring (trade) & Supply chain finance
- Corporate budget

Investment management

Active management
Efficient market hypothesis
Portfolio
Modern portfolio theory
- Capital asset pricing model
Arbitrage pricing theory
Passive management
- Index fund
Activist shareholder
Mutual fund
- Open-end fund
- Closed-end fund
- List of mutual-fund families
Financial engineering
- Long-Term Capital Management
Hedge fund
Hedge
1. Quantitative investing, below

Personal finance

529 plan (US college savings)
ABLE account (US plan for benefit of individuals with disabilities)
Asset allocation
- Asset location
Budget
Coverdell Education Savings Account (Coverdell ESAs, formerly known as Education IRAs)
Credit and debt
- Credit card
- Debt consolidation
- Mortgage loan
  - Continuous-repayment mortgage
Debit card
Direct deposit
Employment contract
- Commission
- Employee stock option
- Employee or fringe benefit
- Health insurance
- Paycheck
- Salary
- Wage
Financial literacy
Insurance
Predatory lending
Retirement plan
- Australia – Superannuation in Australia
- Canada
  - Registered retirement savings plan
  - Tax-free savings account
- Japan – Nippon individual savings account
- New Zealand – KiwiSaver
- United Kingdom
  - Individual savings account
  - Self-invested personal pension
- United States
  - 401(a)
  - 401(k)
  - 403(b)
  - 457 plan
  - Keogh plan
  - Individual retirement account
    - Roth IRA
    - Traditional IRA
    - SEP IRA
    - SIMPLE IRA
- Pension
Simple living
Social security
Tax advantage
Wealth
Comparison of accounting software
Personal financial management
Investment club
Collective investment scheme

Public finance

Central bank
Federal Reserve
Fractional-reserve banking
- Deposit creation multiplier
Tax
- Capital gains tax
- Estate tax (and inheritance tax)
- Gift tax
- Income tax
- Inheritance tax
- Payroll tax
- Property tax (including land value tax)
- Sales tax (including value added tax, excise tax, and use tax)
- Transfer tax (including stamp duty)
- Tax advantage
- Tax, tariff and trade
- Tax amortization benefit
Crowding out
Industrial policy
Agricultural policy
Currency union
Monetary reform

Risk management

Main page: Finance:Financial risk management

Asset and liability management
Asset liability mismatch
Capital Requirements Directives
Cash flow hedge
Cash management
Corporate governance
Climate-related asset stranding
Credit risk
Default
Downside risk & Upside risk
Duration gap
Enterprise risk management
Finance § Risk management
Financial engineering
Financial risk
Financial risk management
Foreign exchange hedge
Fuel price risk management
Gordon–Loeb model for cyber security investments
Interest rate risk
Insurance
Investment risk
Irrational exuberance
Kelly criterion
Liquidity risk
Market risk
Operational risk
Risk adjusted return on capital
Risk aversion
Risk-based internal audit
Risk management § Finance
Risk measure
- Coherent risk measure
- Deviation risk measure
- Distortion risk measure
- Spectral risk measure
Risk modeling
Risk of ruin
Risk pool
Risk register
Risk return ratio
Risk–return spectrum
Security management
Settlement risk
Shadow banking system
Specific risk
St. Petersburg paradox
Systematic risk
Three lines of defence
Treasury management
Uncompensated risk
Valuation risk
Value at risk
- Computation
  - Historical
  - Monte Carlo
  - variance-covariance
  - delta-gamma
- Alternate measures
  - Entropic value at risk
  - Conditional value-at-risk / Expected shortfall
  - Tail value at risk
- Extensions
  - Profit at risk
  - Margin at risk
  - Liquidity at risk
  - Earnings at risk
  - Cash flow at risk
Volatility risk
Wrong way risk

Constraint finance

Environmental finance
Feminist economics
Green economics
Islamic economics
Uneconomic growth
Value of Earth
Value of life

Insurance

Actuarial science
Annuities
Catastrophe modeling
Earthquake loss
Extended coverage
Insurable interest
Insurable risk
Insurance
- Health insurance
  - Disability insurance
  - Accident insurance
  - Flexible spending account
  - Health savings account
  - Long term care insurance
  - Medical savings account
- Life insurance
  - Life insurance tax shelter
  - Permanent life insurance
  - Term life insurance
  - Universal life insurance
  - Variable universal life insurance
  - Whole life insurance
- Property insurance
  - Auto insurance
  - Boiler insurance
  - Business interruption insurance
  - Condo insurance
  - Earthquake insurance
  - Home insurance
  - Title insurance
  - Pet insurance
  - Renters' insurance
- Casualty insurance
  - Fidelity bond
  - Liability insurance
  - Political risk insurance
  - Surety bond
  - Terrorism insurance
- Credit insurance
  - Trade credit insurance
  - Payment protection insurance
  - Credit derivative
- Mid-term adjustment
- Reinsurance
- Self insurance
- Travel insurance
- Niche insurance
Insurance contract
Loss payee clause
Risk Retention Group

Economics and finance

Finance-related areas of economics

Financial economics
Financial econometrics
Monetary economics
Mathematical economics
Managerial economics
Economic growth theory
Decision theory
Game theory
Experimental economics / Experimental finance
Behavioral economics / Behavioral finance

Corporate finance theory

Fisher separation theorem
Modigliani–Miller theorem
Theory of the firm
The Theory of Investment Value
Agency theory
Managerial finance
Capital structure
- Corporate finance § Capitalization structure
- Capital structure substitution theory
- Pecking order theory
- Market timing hypothesis
- Trade-off theory of capital structure
- Merton model
- Tax shield
Dividend policy
- Corporate finance § Dividend policy
- Walter model
- Gordon model
- Lintner model
- Residuals theory
- Clientele effect
- Dividend puzzle
- Treasury stock § Buying back shares
- Dividend tax
Capital budgeting (valuation)
- Corporate finance § Investment and project valuation
- Clean surplus accounting
- Residual income valuation
- Economic value added / Market value added
- T-model
- Adjusted present value
- Uncertainty
  - Penalized present value
  - Expected commercial value
  - Risk-adjusted net present value
  - Contingent claim valuation
  - Real options
  - Monte Carlo methods
Risk management
- Corporate finance § Financial risk management
- Financial risk management § Corporate finance
- Hedging irrelevance proposition
- Risk modeling
- Risk-adjusted return on capital

Asset pricing theory

Main page: Finance:Asset pricing

Value (economics)
- Fair value
- Intrinsic value
- Market price
- Expected value
- Opportunity cost
- Risk premium
  1. Underlying theory below
Financial markets
- Stylized fact
- Regulatory economics
  - Macroprudential regulation § Theoretical rationale
- Market microstructure
  - Walrasian auction
  - Fisher market
  - Arrow-Debreu market
  - Matching market
- Market design
- Agent-based model
  - Representative agent
  - Aggregation problem
  - Heterogeneity in economics
    - Heterogeneous agent model
    - Agent-based model § In economics and social sciences
    - Artificial financial market
Equilibrium price
- Market efficiency
- Economic equilibrium
- Rational expectations
- Risk factor
General equilibrium theory
- Supply and demand
- Competitive equilibrium
- Economic equilibrium
- Partial equilibrium
Arbitrage-free price
- Rational pricing
  - § Arbitrage free pricing
  - § Risk neutral valuation
- Contingent claim analysis
- Brownian model of financial markets
- Complete market & Incomplete markets
Utility
- Risk aversion
- Expected utility hypothesis
- Utility maximization problem
- Marginal utility
- Quasilinear utility
- Generalized expected utility
Economic efficiency
- Efficient-market hypothesis
- efficient frontier
- Production–possibility frontier
- Allocative efficiency
- Pareto efficiency
- Productive efficiency
- Dumb agent theory
State prices
- Arrow–Debreu model
- Stochastic discount factor
- Pricing kernel
- Application:
  - Arrow–Debreu model § Economics of uncertainty: insurance and finance
  - State prices § Application to financial assets
Fundamental theorem of asset pricing
- Rational pricing
- Arbitrage-free
- No free lunch with vanishing risk
- Self-financing portfolio
- Stochastic dominance
  - Marginal conditional stochastic dominance
Martingale pricing
- Brownian model of financial markets
- Random walk hypothesis
- Risk-neutral measure
- Martingale (probability theory)
  - Sigma-martingale
  - Semimartingale
Quantum finance

Asset pricing models

Equilibrium pricing
- Equities; foreign exchange and commodities
  - Capital asset pricing model
  - Consumption-based CAPM
  - Intertemporal CAPM
  - Single-index model
  - Multiple factor models
    - Fama–French three-factor model
    - Carhart four-factor model
  - Arbitrage pricing theory
- Bonds; other interest rate instruments
  - Vasicek
  - Rendleman–Bartter
  - Cox–Ingersoll–Ross
Risk neutral pricing
- Equities; foreign exchange and commodities; interest rates
  - Black–Scholes
  - Black
  - Garman–Kohlhagen
  - Heston
  - CEV
  - SABR
- Bonds; other interest rate instruments
  - Ho–Lee
  - Hull–White
  - Black–Derman–Toy
  - Black–Karasinski
  - Kalotay–Williams–Fabozzi
  - Longstaff–Schwartz
  - Chen
  - Rendleman–Bartter
  - Heath–Jarrow–Morton
    - Cheyette
  - Brace–Gatarek–Musiela
    - LIBOR market model

Mathematics and finance

Time value of money

Present value
Future value
Discounting
Net present value
Internal rate of return
Annuity
Perpetuity

Financial mathematics

Mathematical tools

Probability
- Probability distribution
  - Binomial distribution
  - Log-normal distribution
  - Poisson distribution
Stochastic calculus
- Brownian motion
  - Geometric Brownian motion
- Cameron–Martin theorem
- Feynman–Kac formula
- Girsanov's theorem
- Itô's lemma
- Martingale representation theorem
- Radon–Nikodym derivative
- Stochastic differential equations
- Stochastic process
  - Jump process
  - Lévy process
  - Markov process
  - Ornstein–Uhlenbeck process
  - Wiener process
Monte Carlo methods
- Low-discrepancy sequence
- Monte Carlo integration
- Quasi-Monte Carlo method
- Random number generation
Partial differential equations
- Finite difference method
- Heat equation
- Numerical partial differential equations
  - Crank–Nicolson method
  - Finite difference method: Numerical analysis
Volatility
- ARCH model
- GARCH model
- Stochastic volatility
- Stochastic volatility jump

Derivatives pricing

Underlying logic (see also #Economics and finance above)
- Rational pricing
  - Risk-neutral measure
  - Arbitrage-free pricing
- Brownian model of financial markets
- Martingale pricing
Forward contract
- Forward contract pricing
Futures
- Futures contract pricing
Options (incl. Real options and ESOs)
- Valuation of options
- Black–Scholes formula
  - Approximations for American options
    - Barone-Adesi and Whaley
    - Bjerksund and Stensland
    - Black's approximation
    - Optimal stopping
    - Roll–Geske–Whaley
- Black model
- Binomial options model
- Finite difference methods for option pricing
- Garman–Kohlhagen model
- The Greeks
- Lattice model
- Margrabe's formula
- Monte Carlo methods for option pricing
  - Monte Carlo methods in finance
  - Quasi-Monte Carlo methods in finance
  - Least Square Monte Carlo for American options
- Trinomial tree
- Volatility
  - Implied volatility
  - Historical volatility
  - Volatility smile (& Volatility surface)
  - Stochastic volatility
    - Constant elasticity of variance model
    - Heston model
    - SABR volatility model
  - Local volatility
    - Implied binomial tree
    - Implied trinomial tree
    - Edgeworth binomial tree
    - Johnson binomial tree
Swaps
- Swap valuation
  - Asset swap § Computing the asset swap spread
  - Credit default swap § Pricing and valuation
  - Currency swap § Valuation and pricing
  - Interest rate swap § Valuation and pricing
    - Multi-curve framework
  - Variance swap § Pricing and valuation
Interest rate derivatives (bond options, swaptions, caps and floors, and others)
- Black model
  - caps and floors
  - swaptions
  - Bond options
- Short-rate models (generally applied via lattice based- and specialized simulation-models, although "Black like" formulae exist in some cases.)
  - Rendleman–Bartter model
  - Vasicek model
  - Ho–Lee model
  - Hull–White model
  - Cox–Ingersoll–Ross model
  - Black–Karasinski model
  - Black–Derman–Toy model
  - Kalotay–Williams–Fabozzi model
  - Longstaff–Schwartz model
  - Chen model
- Forward rate / Forward curve -based models (Application as per short-rate models)
  - LIBOR market model (also called: Brace–Gatarek–Musiela Model, BGM)
  - Heath–Jarrow–Morton Model (HJM)
  - Cheyette model
Valuation adjustments
- Credit valuation adjustment
- XVA
Yield curve modelling
- Multi-curve framework
- Bootstrapping
- Yield curve § Construction of the full yield curve from market data
- Fixed-income attribution § Modeling the yield curve
- Nelson-Siegel
- Principal component analysis § Quantitative finance

Portfolio mathematics

1. Mathematical techniques below
2. Quantitative investing below
Modern portfolio theory § Mathematical model
Portfolio optimization
- § Optimization methods
- § Mathematical tools
Merton's portfolio problem
Kelly criterion
Roy's safety-first criterion
Specific applications:
- Black–Litterman model
- Universal portfolio algorithm
- Markowitz model
- Treynor–Black model

Financial markets

 Financial markets

Market and instruments

Capital markets
Securities
Financial markets
Primary market
Initial public offering
Aftermarket
Free market
Bull market
Bear market
Bear market rally
Market maker
Dow Jones Industrial Average
Nasdaq
List of stock exchanges
List of stock market indices
List of corporations by market capitalization
Value Line Composite Index

Equity market

Stock market
Stock
Common stock
Preferred stock
Treasury stock
Equity investment
Index investing
Private Equity
Financial reports and statements
Fundamental analysis
Dividend
Dividend yield
Stock split

Equity valuation

Dow theory
Elliott wave principle
Economic value added
Fibonacci retracement
Gordon model
Growth stock
- PEG ratio
- PVGO
Mergers and acquisitions
Leveraged buyout
Takeover
Corporate raid
PE ratio
Market capitalization
Income per share
Stock valuation
Technical analysis
Chart patterns
V-trend
Paper valuation

Investment theory

Behavioral finance
Dead cat bounce
Efficient market hypothesis
Market microstructure
Stock market crash
Stock market bubble
January effect
Mark Twain effect
Quantitative behavioral finance
Quantitative analysis
Statistical arbitrage

Bond market

Bond
Zero-coupon bond
Junk bonds
Convertible bond
Accrual bond
Municipal bond
Sovereign bond
Bond valuation
- Yield to maturity
- Bond duration
- Bond convexity
Fixed income

Money market

Repurchase agreement
International Money Market
Currency
Exchange rate
International currency codes
Table of historical exchange rates

Commodity market

Commodity
- Asset
- Commodity Futures Trading Commission
- Commodity trade
- Drawdowns
- Forfaiting
- Fundamental analysis
- Futures contract
- Fungibility
- Gold as an investment
- Hedging
- Jesse Lauriston Livermore
- List of traded commodities
- Ownership equity
- Position trader
- Risk (Futures)
- Seasonal traders
- Seasonal spread trading
- Slippage
- Speculation
- Spread trade
- Technical analysis
  - Breakout
  - Bear market
  - Bottom (technical analysis)
  - Bull market
  - MACD
  - Moving average
  - Open Interest
  - Parabolic SAR
  - Point and figure charts
  - Resistance
  - RSI
  - Stochastic oscillator
  - Stop loss
  - Support
  - Top (technical analysis)
- Trade
- Trend

Derivatives market

Derivative
(see also Financial mathematics topics; Derivatives pricing)
Underlying instrument

Forward markets and contracts

Forward contract

Futures markets and contracts

Backwardation
Contango
Futures contract
- Financial future
  - Currency future
  - Interest rate future
  - Single-stock futures
  - Stock market index future
Futures exchange

Option markets and contracts

Options
- Stock option
  - Box spread
  - Call option
  - Put option
  - Strike price
  - Put–call parity
  - The Greeks
  - Black–Scholes formula
  - Black model
  - Binomial options model
  - Implied volatility
  - Option time value
  - Moneyness
    - At-the-money
    - In-the-money
    - Out-of-the-money
  - Straddle
  - Option style
    - Vanilla option
    - Exotic option
    - Binary option
    - European option
      - Interest rate floor
      - Interest rate cap
    - Bermudan option
    - American option
    - Quanto option
    - Asian option
  - Employee stock option
- Warrants
- Foreign exchange option
- Interest rate options
- Bond options
- Real options
- Options on futures

Swap markets and contracts

Swap
- Interest rate swap
- Basis swap
- Asset swap
- Forex swap
- Stock swap
- Equity swap
- Currency swap
- Variance swap

Derivative markets by underlyings

Equity derivatives

Contract for difference (CFD)
Exchange-traded fund (ETF)
- Closed-end fund
- Inverse exchange-traded fund
Equity options
Equity swap
Real estate investment trust (REIT)
Warrants
- Covered warrant

Interest rate derivatives

LIBOR
Forward rate agreement
Interest rate swap
Interest rate cap
Exotic interest rate option
Bond option
Interest rate future
Money market instruments
Range accrual Swaps/Notes/Bonds
In-arrears Swap
Constant maturity swap (CMS) or Constant Treasury Swap (CTS) derivatives (swaps, caps, floors)
Interest rate Swaption
Bermudan swaptions
Cross currency swaptions
Power Reverse Dual Currency note (PRDC or Turbo)
Target redemption note (TARN)
CMS steepener
Snowball
Inverse floater
Strips of Collateralized mortgage obligation
- Interest only (IO)
- Principal only (PO)
Ratchet caps and floors

Credit derivatives

Credit default swap
Collateralized debt obligation
Credit default option
Total return swap
Securitization
- Strip financing

Foreign exchange derivative

Basis swap
Currency future
Currency swap
Foreign exchange binary option
Foreign exchange forward
Foreign exchange option
Forward exchange rate
Foreign exchange swap
Foreign exchange hedge
Non-deliverable forward
Power reverse dual-currency note

Financial regulation

Corporate governance
Financial regulation
- Bank regulation
  - Banking license
License

Designations and accreditation

Certified Financial Planner
Chartered Financial Analyst
- CFA Institute
Chartered Alternative Investment Analyst
Professional risk manager
Chartered Financial Consultant
Canadian Securities Institute
Independent financial adviser
- Chartered Insurance Institute
Financial risk manager
Chartered Market Technician
Certified Financial Technician

Litigation

Liabilities Subject to Compromise

Fraud

Forex scam
Insider trading
Legal origins theory
Petition mill
Ponzi scheme

Industry bodies

International Swaps and Derivatives Association
National Association of Securities Dealers

Regulatory bodies

International

Bank for International Settlements
International Organization of Securities Commissions
Security Commission
Basel Committee on Banking Supervision
Basel Accords – Basel I, Basel II, Basel III
International Association of Insurance Supervisors
International Accounting Standards Board

European Union

European Securities Committee (EU)
Committee of European Securities Regulators (EU)

Regulatory bodies by country

United Kingdom

Financial Conduct Authority
Prudential Regulation Authority (United Kingdom)

United States

Commodity Futures Trading Commission
Federal Reserve
Federal Trade Commission
Municipal Securities Rulemaking Board
Office of the Comptroller of the Currency
Securities and Exchange Commission

United States legislation

Glass–Steagall Act (US)
Gramm–Leach–Bliley Act (US)
Sarbanes–Oxley Act (US)
Securities Act of 1933 (US)
Securities Exchange Act of 1934 (US)
Investment Advisers Act of 1940 (US)
USA PATRIOT Act

Actuarial topics

Actuarial topics

Valuation

Underlying theory

Value (economics)
Valuation and specifically § Valuation overview
"The Theory of Investment Value"
Financial economics § Corporate finance theory
Valuation risk
Real versus nominal value (economics)
Real prices and ideal prices
Fair value
- Fair value accounting
Intrinsic value
Market price
Value in use
Fairness opinion
Asset pricing (see also #Asset pricing theory above)
- Equilibrium price
  - market efficiency
  - economic equilibrium
  - rational expectations
- Arbitrage-free price
  - Rational pricing § Arbitrage free pricing
  - Rational pricing § Risk neutral valuation

Context

(Corporate) Bonds
- Bond valuation
- Bond (finance) § Bond valuation
- Corporate bond § Valuation
Equity valuation
- #Equity valuation above
- Fundamental analysis
- Stock valuation
- Capital Markets
- Business valuation
- Equity (finance) § Valuation
- Intrinsic value (finance) § Equity
- Capital budgeting and Corporate finance § Investment and project valuation
- The Theory of Investment Value
Real estate valuation
- Real estate appraisal
- Real estate economics

Considerations

Bonds
- covenants and indentures
- secured / unsecured debt
- senior / subordinated debt
- embedded options
Equity
- Minimum acceptable rate of return
- Margin of safety (financial)
- Enterprise value
- Sum-of-the-parts analysis
  - Conglomerate discount
- Minority discount
- Control premium
- Accretion/dilution analysis
- Certainty equivalent
- Haircut
- Paper valuation

Discounted cash flow valuation

Bond valuation
- Modeling
  - Present value § PV of a bond
  - Bond valuation § Present value approach
  - Bond valuation § Arbitrage-free pricing approach
  - embedded options:
    - Pull to par
    - Lattice model (finance) § Hybrid securities
- Results
  - Clean price
  - Dirty price
  - Yield to maturity
  - Coupon yield
  - Current yield
  - Duration
  - Convexity
  - embedded options:
    - Option-adjusted spread
    - effective duration
    - effective convexity
- Cash flows
  - Principal (finance)
  - Coupon (bond)
  - Fixed rate bond
  - Floating rate note
  - Zero-coupon bond
  - Accrual bond
  - sinking fund provisions
Real estate valuation
- Intrinsic value (finance) § Real estate
- Income approach
  - Net Operating Income
  - Real estate appraisal § The income approach
  - German income approach
Equity valuation
- Results
  - Net present value
  - Adjusted present value
  - Equivalent Annual Cost
  - Payback period
  - Discounted payback period
  - Internal rate of return
  - Modified Internal Rate of Return
  - Return on investment
  - Profitability index
- Specific models and approaches
  - Dividend discount model
  - Gordon growth model
  - Market value added / Economic value added
  - Residual income valuation
  - First Chicago Method
  - rNPV
  - Fed model
  - Chepakovich valuation model
  - Sum of perpetuities method
  - Benjamin Graham formula
  - LBO valuation model
  - Goldman Sachs asset management factor model
- Cash flows
  - Cash flow forecasting
  - EBIDTA
  - NOPAT
  - Free cash flow
    - Free cash flow to firm
    - Free cash flow to equity
  - Dividends
  - Valuation using discounted cash flows § Determine cash flow for each forecast period

Relative valuation

Bonds
- Bond valuation § Relative price approach
- Yield spread
  - I-spread
  - Option-adjusted spread
  - Z-spread
  - Asset swap spread
- Credit spread (bond)
  - Bond credit rating
  - Altman Z-score
  - Ohlson O-score
  - Book value
  - Debt-to-equity ratio
  - Debt-to-capital ratio
  - Current ratio
  - Quick ratio
  - Debt ratio
Real estate
- Capitalization rate
- Gross rent multiplier
- Sales comparison approach
  - Real estate appraisal § The sales comparison approach
- Cash on cash return
Equity
- Financial ratio
- Market-based valuation
- Valuation using multiples
- Comparable company analysis
- Dividend yield
  - Yield gap
- Return on equity
  - DuPont analysis
- PE ratio
  - PEG ratio
  - Cyclically adjusted price-to-earnings ratio
  - PVGO
- P/B ratio
- Price to cash based earnings
- Price to Sales
- EV/EBITDA
- EV/Sales
- Stock image
- Valuation using the Market Penetration Model
- Graham number
- Tobin's q

Contingent claim valuation

Valuation techniques
- general
  - Valuation of options
  - Option (finance) § Valuation
    1. Derivatives pricing above
- as typically employed
  - Real options valuation
  - Rational pricing § The replicating portfolio
  - Financial economics § Corporate finance theory
  - Lattice model (finance) § Hybrid securities
  - Monte Carlo methods in finance
Applications
- Corporate investments and projects
  - Real options
  - Corporate finance § Valuing flexibility
  - Contingent value rights
  - Business valuation § Option pricing approaches
  - structured finance investments (funding dependent)
  - special purpose entities (funding dependent)
- Balance sheet assets and liabilities
  - warrants and other convertible securities
  - securities with embedded options such as callable bonds
  - employee stock options

Other approaches

"Fundamentals"-based (relying on accounting information)
- T-model
- Residual income valuation
- Clean surplus accounting
- Net asset value method
- Excess earnings method
- Historical earnings valuation
- Future maintainable earnings valuation
- Graham number

Financial modeling

Cash flow
- Cash flow forecasting
- Cash flow statement
- Operating cash flow
- EBIDTA
  - Depreciation § Effect on cash
- NOPAT
- Free cash flow
  - Free cash flow to firm
  - Free cash flow to equity
- Dividends
- Cash is king
- Mid-year adjustment
- Owner earnings
Required return (i.e. discount rate)
- Valuation using discounted cash flows § Determine discount factor / rate
- Cost of capital
- Weighted average cost of capital
- Cost of equity
- Cost of debt
- Capital asset pricing model
  - Beta (finance) § Empirical estimation
  - Hamada's equation
  - Pure play method
- Arbitrage pricing theory
- Business valuation § Build-up method
  - Total Beta
- T-model
  - cash-flow T-model
Terminal value
- Valuation using discounted cash flows § Determine the continuing value
- Forecast period
- long term growth rate
  - Sustainable growth rate § From a financial perspective
  - Stock valuation § Growth rate
Forecasted financial statements
- Financial forecast
- Financial modeling § Accounting
- Pro forma § Financial statements
- Revenue
  - Revenue model
  - Revenue § Financial statement analysis
  - Revenue management § Forecasting
  - Net sales
- Costs
  - Profit margin
    - Gross margin
    - Net margin
    - Cost of goods sold
  - Operating expenses
    - Operating ratio
  - Cost driver
  - Fixed cost
  - Variable cost
  - Overhead cost
  - Value chain
  - activity based costing
  - common-size analysis
  - Profit model
- Capital
  - Capital structure
  - common-size analysis
  - Equity
    - Shareholders' equity
    - Book value
    - Retained earnings
  - Financial capital
    - Long term asset / Fixed asset
      - Fixed-asset turnover
    - Long-term liabilities
      - Debt-to-equity ratio
      - Debt-to-capital ratio
  - Working capital
    - Current asset
    - Current liability
    - Inventory turnover / Days in inventory
    - Cost of goods sold
    - Debtor & Creditor days
    - Days sales outstanding
    - Days payable outstanding

Portfolio theory

General concepts

Portfolio
Portfolio manager
Investment management
- Active management
- Passive management (Buy and hold)
  - Index fund
- Core & Satellite
- Smart beta
- Expense ratio
- Investment style
  - Value investing
  - Contrarian investing
  - Growth investing
    - CAN SLIM
  - Index investing
  - Magic formula investing
  - Momentum investing
  - Quality investing
  - Style investing
  - Factor investing
- Investment strategy
  - Benchmark-driven investment strategy
  - Liability-driven investment strategy
- Financial risk management § Investment management
Investor profile
Rate of return on a portfolio / Investment performance
Risk return ratio
- Risk–return spectrum
Risk factor
Portfolio optimization
Diversification
Asset classes
- Exter's Pyramid
Asset allocation
- Tactical asset allocation
  - Global tactical asset allocation
- Strategic asset allocation
- Dynamic asset allocation
Sector rotation
Correlation & covariance
- Covariance matrix
- Correlation matrix
Risk-free interest rate
Leverage
Utility function
Intertemporal portfolio choice
Portfolio insurance
- Constant proportion portfolio insurance
Mathematical finance § Risk and portfolio management: the P world
Quantitative investment / Quantitative fund (see below)
Uncompensated risk

Modern portfolio theory

Portfolio optimization
- Risk return ratio
- Risk–return spectrum
- Economic efficiency
  - Efficient-market hypothesis
  - Random walk hypothesis
- Utility maximization problem
- Markowitz model
- Merton's portfolio problem
- Kelly criterion
- Roy's safety-first criterion
Theory and results (derivation of the CAPM)
- Equilibrium price
- Market price
- Systematic risk
  - Risk factor
- Idiosyncratic risk / Specific risk
- Mean-variance analysis (Two-moment decision model)
- Efficient frontier (Mean variance efficiency)
- Feasible set
- Mutual fund separation theorem
  - Separation property
- Tangent portfolio
- Market portfolio
- Beta
  - Fama–MacBeth regression
  - Hamada's equation
  - Capital structure substitution theory § Beta
- Capital allocation line
- Capital market line
- Security characteristic line
- Capital asset pricing model
  - Single-index model
- Security market line
- Roll's critique
Related measures
- Alpha
- Sharpe ratio
- Treynor ratio
- Jensen's alpha
Optimization models
- Markowitz model
- Treynor–Black model

Equilibrium pricing models (CAPM and extensions)
- Capital asset pricing model (CAPM)
- Consumption-based capital asset pricing model (CCAPM)
- Intertemporal CAPM (ICAPM)
- Single-index model
- Multiple factor models (see Risk factor)
  - Fama–French three-factor model
  - Carhart four-factor model
  - Arbitrage pricing theory (APT)

Post-modern portfolio theory

Approaches
- Behavioral portfolio theory
- Stochastic portfolio theory
  - Chance-constrained portfolio selection
- Maslowian portfolio theory
- Dedicated portfolio theory (fixed income specific)
- Risk parity
- Tail risk parity
Optimization considerations
- Pareto efficiency
- Bayesian efficiency
- Multiple-criteria decision analysis
- Multi-objective optimization
- Stochastic dominance
  - Second-order Stochastic dominance
  - Marginal conditional stochastic dominance
- Downside risk
- Volatility skewness
- Semivariance
- Expected shortfall (ES; also called conditional value at risk (CVaR), average value at risk (AVaR), expected tail loss (ETL))
- Tail value at risk
- Statistical dispersion
- Discounted maximum loss
- Indifference price
Measures
- Dual-beta
  - Downside beta
  - Upside beta
- Upside potential ratio
- Upside risk
- Downside risk
- Sortino ratio
- Omega ratio
- Bias ratio
- Information ratio
  - Active return
  - Active risk
- Deviation risk measure
- Distortion risk measure
- Spectral risk measure
Optimization models
- Black–Litterman model
- Universal portfolio algorithm

Performance measurement

Alpha
Beta
Performance attribution
- Market timing
- Stock selection
Fixed-income attribution
Benchmark
Lipper average
Returns-based style analysis
Rate of return on a portfolio
Holding period return
Tracking error
- Attribution analysis
Style drift
- Returns-based style analysis
Simple Dietz method
Modified Dietz method
Modigliani risk-adjusted performance
Upside potential ratio
Maximum Downside Exposure
Maximum drawdown
- Sterling ratio
Sharpe ratio
Treynor ratio
Jensen's alpha
Bias ratio
V2 ratio
Calmar ratio (hedge fund specific)

Mathematical techniques

Modern portfolio theory § Mathematical model
Quadratic programming
- Critical line method
Nonlinear programming
Mixed integer programming
Stochastic programming (§ Multistage portfolio optimization)
Copula (probability theory) (§ Quantitative finance)
Principal component analysis (§ Quantitative finance)
Deterministic global optimization
Genetic algorithm (List of genetic algorithm applications § Finance and Economics)
Machine learning (§ Applications)
Artificial neural network
Extended Mathematical Programming (§ EMP for stochastic programming)

Quantitative investing

Quantitative investing
Quantitative fund
Quantitative analysis (finance) § Quantitative investment management
Quantitative analysis (finance) § Algorithmic trading quantitative analyst
Trading:
- Automated trading
- High-frequency trading
- Algorithmic trading
- Program trading
- Systematic trading
  - Technical analysis § Systematic trading
- Trading strategy
- Mirror trading
- Copy trading
- Social trading
- VWAP
- TWAP
- Electronic trading platform
- Statistical arbitrage
Portfolio optimization:
- Portfolio optimization § Optimization methods
- Portfolio optimization § Mathematical tools
- Black–Litterman model
- Universal portfolio algorithm
- Markowitz model
- Treynor–Black model
- other models
- Factor investing
  - low-volatility investing
  - value investing
  - momentum investing
- Alpha generation platform
- Kelly criterion
- Roy's safety-first criterion
Risks:
- Best execution
- Implementation shortfall
- Trading curb
- Market impact
- Market depth
- Slippage
- Transaction costs
Discussion:
- Automated trading system § Market disruption and manipulation
- High-frequency trading § Risks and controversy
- Algorithmic trading § Issues and developments
- Positive feedback § Systemic risk
- 2010 flash crash
- Black Monday (1987) § Causes
- Statistical arbitrage § StatArb and systemic risk: events of summer 2007
Leading companies:
- Prediction Company
- Renaissance Technologies
- D. E. Shaw & Co
- AQR Capital
- Barclays Investment Bank
- Cantab Capital Partners
- Robeco
- Jane Street Capital

Financial software tools

Straight Through Processing Software
Technical Analysis Software
Algorithmic trading
Electronic trading platform
List of numerical-analysis software
Comparison of numerical-analysis software

Financial modeling applications

Corporate Finance

Business valuation / stock valuation - especially via discounted cash flow, but including other valuation approaches
Scenario planning and management decision making ("what is"; "what if"; "what has to be done"^[1])
Capital budgeting, including cost of capital (i.e. WACC) calculations
Financial statement analysis / ratio analysis (including of operating- and finance leases, and R&D)
Revenue related: forecasting, analysis
Project finance modeling
Cash flow forecasting
Credit decisioning: Credit analysis, Consumer credit risk; impairment- and provision-modeling
Working capital- and treasury management; asset and liability management
Management accounting: Activity-based costing, Profitability analysis, Cost analysis, Whole-life cost

Quantitative finance

Option pricing and calculation of their "Greeks"
Other derivatives, especially interest rate derivatives, credit derivatives and exotic derivatives
Modeling the term structure of interest rates (bootstrapping / multi-curves, short-rate models, HJM framework) and credit spreads
Credit valuation adjustment, CVA, as well as the various XVA
Credit risk, counterparty credit risk, and regulatory capital: EAD, PD, LGD, PFE
Structured product design and manufacture
Portfolio optimization^[2] and Quantitative investing more generally; see further re optimization methods employed.
Financial risk modeling: value at risk (parametric- and / or historical, CVaR, EVT), stress testing, "sensitivities" analysis

Financial institutions

Bank
- List of banks
  - List of banks in the Arab World
  - List of banks in Africa
  - List of banks in the Americas
  - List of banks in Asia
  - List of banks in Europe
  - List of banks in Oceania
  - List of international banking institutions
- Advising bank
- Central bank
  - List of central banks
- Commercial bank
- Community development bank
- Cooperative bank
- Custodian bank
- Depository bank
- Ethical bank
- Investment bank
- Islamic banking
- Merchant bank
- Microcredit
- Mutual savings bank
- National bank
- Offshore bank
- Private bank
- Savings bank
- Swiss bank
- Bank holding company
Building society
Broker
- Broker-dealer
- Brokerage firm
- Commodity broker
- Insurance broker
- Prime brokerage
- Retail broker
- Stockbroker
Clearing house
Commercial lender
Community development financial institution
Credit rating agency
Credit union
Diversified financial
Edge Act Corporation
Export Credit Agencies
Financial adviser
Financial intermediary
Financial planner
Futures exchange
- List of futures exchanges
Government sponsored enterprise
Hard money lender
Independent financial adviser
Industrial loan company
Insurance company
Investment adviser
Investment company
Investment trust
Large and Complex Financial Institutions
Mutual fund
Non-banking financial company
Savings and loan association
Stock exchange
- List of stock exchanges
Trust company

Education

For the typical finance career path and corresponding education requirements see:
- Financial analyst generally, and esp. § Qualification, discussing various investment, banking, and corporate roles (i.e. financial management, corporate finance, investment banking, securities analysis & valuation, portfolio & investment management, credit analysis, working capital & treasury management; see Financial modeling § Accounting)
- Quantitative analyst, Quantitative analysis (finance) § Education and Financial engineering § Education, specifically re roles in quantitative finance (i.e. derivative pricing & hedging, interest rate modeling, financial risk management, financial engineering, computational finance; also, the mathematically intensive variant on the banking roles; see Financial modeling § Quantitative finance)
Business education lists undergraduate degrees in business, commerce, accounting and economics; "finance" may be taken as a major in most of these, whereas "quantitative finance" is almost invariably postgraduate, following a math-focused Bachelors; the most common degrees for (entry level) investment, banking, and corporate roles are:
- Bachelor of Business Administration (BBA)
- Bachelor of Commerce (BCom)
- Bachelor of Accountancy (B.Acc)
- Bachelor of Economics (B.Econ)
- Bachelor of Finance - the undergraduate version of the MSF below
- The tagged BS / BA "in Finance", or less common, "in Investment Management" or "in Personal Finance"
At the postgraduate level, the MBA, MCom and MSM (and recently the Master of Applied Economics) similarly offer training in finance generally; at this level there are also the following specifically focused master's degrees, with MSF the broadest - see Master of Finance § Comparison with other qualifications for their focus and inter-relation:
- Master of Applied Finance (M.App.Fin)
- Master of Commerce in Finance (MCom)
- Master of Computational Finance
- Master's in Corporate Finance
- Master of Finance (M.Fin, MIF)
- Master's in Financial Analysis
- Master of Financial Economics
- Master of Financial Engineering (MFE)
- Master of Financial Planning
- Master's in Financial Management
- Master of Financial Mathematics
- Master's in Financial Risk Management
- Master's in Investment Management
- Master of Mathematical Finance
- Master of Quantitative Finance (MQF)
- Master of Science in Finance (MSF, MSc Finance)
- MS in Fintech
Doctoral-training in finance is usually a requirement for academia, but not relevant to industry
- quants often enter the profession with PhDs in disciplines such as physics, mathematics, engineering, and computer science, and learn finance "on the job”
- as an academic field, finance theory is studied and developed within the disciplines of management, (financial) economics, accountancy, and applied / financial mathematics.
For specialized roles, there are various Professional Certifications in financial services (see #Designations and accreditation above); the best recognized are arguably:
- Association of Corporate Treasurers (MCT / FCT)
- Certificate in Quantitative Finance (CQF)
- Certified Financial Planner (CFP)
- Certified International Investment Analyst (CIIA)
- Certified Treasury Professional (CTP)
- Chartered Alternative Investment Analyst (CAIA)
- Chartered Financial Analyst (CFA)
- Chartered Wealth Manager (CWM)
- CISI Diploma in Capital Markets (MCSI)
- Financial Risk Manager (FRM)
- Professional Risk Manager (PRM)
Various organizations offer executive education, CPD, or other focused training programs, including:
- Amsterdam Institute of Finance
- Canadian Securities Institute
- Chartered Institute for Securities & Investment
- GARP
- Global Risk Institute
- ICMA Centre
- The London Institute of Banking & Finance
- New York Institute of Finance
- PRMIA
- South African Institute of Financial Markets
- Swiss Finance Institute
See also qualifications in related fields:
- Accounting § Education, training and qualifications
- Actuarial credentialing and exams
- Business education
- Credit analyst § Education
- Economics education
- Management § Training and education
- Chief financial officer § Qualifications

Related lists

Index of accounting articles
Outline of business management
Outline of marketing
Outline of economics
Outline of production
List of international trade topics
List of business law topics
List of business theorists
Actuarial topics

References

↑ Joel G. Siegel; Jae K. Shim; Stephen Hartman (1 November 1997). Schaum's quick guide to business formulas: 201 decision-making tools for business, finance, and accounting students. McGraw-Hill Professional. ISBN 978-0-07-058031-2. https://books.google.com/books?id=4JpojQPk8YsC. Retrieved 12 November 2011. §39 "Corporate Planning Models". See also, §294 "Simulation Model".
↑ See for example: Low, R.K.Y.; Faff, R.; Aas, K. (2016). "Enhancing mean–variance portfolio selection by modeling distributional asymmetries". Journal of Economics and Business 85: 49–72. doi:10.1016/j.jeconbus.2016.01.003. https://espace.library.uq.edu.au/view/UQ:377912/UQ377912_OA.pdf. ; Low, R.K.Y.; Alcock, J.; Faff, R.; Brailsford, T. (2013). "Canonical vine copulas in the context of modern portfolio management: Are they worth it?". Journal of Banking & Finance 37 (8): 3085–3099. doi:10.1016/j.jbankfin.2013.02.036. https://espace.library.uq.edu.au/view/UQ:297895/EC15UQ297895.pdf.

External links

Prof. Aswath Damodaran - financial theory, with a focus in Corporate Finance, Valuation and Investments. Updated Data, Excel Spreadsheets.
Web Sites for Discerning Finance Students (Prof. John M. Wachowicz) -Links to finance web sites, grouped by topic
studyfinance.com - introductory finance web site at the University of Arizona
SECLaw.com - law of the financial markets

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Original source: https://en.wikipedia.org/wiki/Outline of finance. Read more

[SiegelShim1997-1] Joel G. Siegel; Jae K. Shim; Stephen Hartman (1 November 1997). Schaum's quick guide to business formulas: 201 decision-making tools for business, finance, and accounting students. McGraw-Hill Professional. ISBN 978-0-07-058031-2. https://books.google.com/books?id=4JpojQPk8YsC. Retrieved 12 November 2011. §39 "Corporate Planning Models". See also, §294 "Simulation Model".

[2] See for example: Low, R.K.Y.; Faff, R.; Aas, K. (2016). "Enhancing mean–variance portfolio selection by modeling distributional asymmetries". Journal of Economics and Business 85: 49–72. doi:10.1016/j.jeconbus.2016.01.003. https://espace.library.uq.edu.au/view/UQ:377912/UQ377912_OA.pdf. ; Low, R.K.Y.; Alcock, J.; Faff, R.; Brailsford, T. (2013). "Canonical vine copulas in the context of modern portfolio management: Are they worth it?". Journal of Banking & Finance 37 (8): 3085–3099. doi:10.1016/j.jbankfin.2013.02.036. https://espace.library.uq.edu.au/view/UQ:297895/EC15UQ297895.pdf.