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A binomial distribution is a discrete probability distribution that shows how many times a given event will occur in a fixed number of trials. The event…

Bond convexity is a measure of the curvature of a bond’s price-yield relation. Convexity is used in the valuation of bonds, to approximate the change in…

A bond is a debt security in which the issuer owes the holders a debt and is obliged to pay them interest (coupons) or to repay the principal at a later…

The bias ratio is a statistical tool used to help finance professionals make more informed investment decisions. It measures the amount of risk associat…

Boiler insurance is a type of home insurance that covers the cost of repairing or replacing your boiler in the event that it breaks down. It typically c…

The binomial options model is a financial model used to price options. The model uses an iterative approach, allowing for the determination of option pr…

Best Execution is the process of executing a financial transaction in a manner that results in the most favorable price for the customer. In order to ac…

Black Monday is a term that refers to the stock market crash of October 19, 1987. It is considered one of the worst stock market crashes in history. Man…

A benchmark-driven investment strategy is an investing strategy in which portfolio managers seek to outperform a specified benchmark index, such as the …

A binary option is a type of Option where the payoff is either some fixed amount of some asset or nothing at all. The two main types of binary options a…

The Benjamin Graham Formula is a mathematical formula that was devised by finance legend Benjamin Graham. The formula is designed to provide a margin of…

A Bermudan option is an exotic type of options contract that allows the holder to exercise the option at certain predetermined dates. The name “Bermudan…

A benchmark is a point of reference against which the performance of an investment or fund manager can be measured. In finance, benchmarks are usually i…

Behavioral portfolio theory (BPT) is an investment theory that seeks to explain how and why investors make the decisions they do when constructing a por…

A bear market rally is when the stock market experiences a temporary rebound after a prolonged period of decline. This typically happens after investors…

Behavioral finance is a field of finance that considers the psychological and behavioral aspects of people when making financial decisions. It studies h…

A bear market is when the stock market falls by 20% or more from its recent highs.

There are two schools of thought on how a bear market happens. On…

Bayesian efficiency is a statistical concept that refers to the ability to make accurate estimates of parameters or quantities using the smallest possib…

Basis risk is the risk that the price of an asset will move differently than the underlying asset. This can happen when two assets are not perfectly cor…

Basel II is an international banking accord that regulates how much capital banks must set aside to cover their assets. It was introduced in 2004 and re…

A basis swap is an interest rate swap where the floating leg references a different index than the fixed leg. The most common type of basis swap is the …

The Basel Committee on Banking Supervision is the primary global standard-setter for the prudential regulation of banks and provides a forum for coopera…

Basel III is the third in a series of banking regulations put forth by the Basel Committee on Banking Supervision, which seeks to ensure that banks have…

The Barone-Adesi and Whaley model is a quadratic approximation method used to price options. It is also known as the “Binomial Put Approximation” model….

The Basel Accords are a set of international banking regulations developed by the Basel Committee on Banking Supervision. The accords are designed to pr…

Basel I is the first of the Basel Accords, which are a series of international banking standards agreed upon by the Basel Committee on Banking Supervisi…

Bankruptcy is a legal process that helps people who can’t pay their debts get a fresh start by liquidating their assets to repay their creditors.

Th…

A bank holding company is a company that controls one or more banks. They can be either diversified or non-diversified. A diversified bank holding compa…

A banking license is a type of financial license that allows a company or individual to engage in the business of banking. Banking licenses are regulate…

A banknote is a piece of paper or cloth that is used as a form of currency. Banknotes are usually issued by a government and are often backed by gold or…

Bank regulation is the process by which banks are supervised and monitored to ensure that they operate within the law. Bank regulators typically have a …

In finance, backwardation is the condition where future prices are lower than spot prices. This happens when the demand for a commodity is greater than …

The Bank for International Settlements (BIS) is an international financial institution that provides central banking services to its member banks. It al…

The balance sheet is a financial statement that provides an overview of a company’s assets, liabilities and shareholder equity. The balance sheet can be…

Balance sheet analysis is the process of reviewing a company’s financial statement in order to better understand its financial health. The balance sheet…