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Treynor ratio formula and calculator
As part of our free investments course, we have already covered two important investment performance measures: Jensen’s alpha and Sharpe ratio. In this post, we focus on the Treynor ratio, which is another popular risk-adjusted performance measure. In particular, we explain the Treynor ratio formula and offer an easy-to-use Treynor ratio calculator as well. Jump […]
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Risk aversion coefficient – meaning and formula
When we discussed investors’ risk preferences, we distinguished between risk-averse, risk-neutral, and risk-seeking behavior. We also explained that risk-averse investors expect compensation for bearing risk, which is called a risk premium. But, how do measure risk aversion? The answer is the risk aversion coefficient. It quantifies the degree to which an individual dislikes risk. In […]
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Emotions in trading and how to control them
Humans are emotional beings. Good news makes us happy, bad ones cause sadness. We feel proud of our successes and regret our mistakes. We may be thrilled to see a celebrity on the street and would fear missing our flight if we leave the house too late. Given that emotions have such a central place […]
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What is liquidity in stocks?
Liquidity is a fundamental concept in finance and trading. But, what is liquidity in stocks in particular and financial markets in general? What is the definition of liquidity risk? In this post, we address these questions by offering a definition of liquidity in economics and finance. Jump to: Definition of liquidity in economics and finance […]
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What is the NFT bay website?
The NFT bay website was launched in November 2021 by Geoffrey Huntley, an Australian artist, in an attempt to draw attention to issues associated with non-fungible tokens, or NFTs. NFTs have become immensely popular as a means of certifying ownership of unique assets. They are commonly used within the context of digital art. Some NFTs […]
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Jensen’s alpha formula and calculator
When evaluating the performance of mutual funds, ETFs, or your own portfolio, it is vital to do that on a risk-adjusted basis. That is, it would be misleading to compare investment opportunities on the basis of returns only as higher returns normally require bearing more risk. In this post, we discuss one of the most […]
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Sharpe ratio calculator, formula, examples
The Sharpe ratio is a popular tool used in performance evaluation. In this post, we offer a Sharpe ratio calculator as well as explain the formula with examples. Jump to The Sharpe ratio formula Using the Sharpe ratio to evaluate performance – an example Ex-ante vs ex-post Sharpe ratio The Sharpe ratio vs the Treynor […]
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Fungible tokens – meaning and examples
Fungible tokens are one of the two main types of digital tokens, the other type being non-fungible tokens (NFTs). In this post, we explain in detail what fungible tokens are and how they differ from NFTs. Jump to: What is fungibility? What are fungible tokens? ‘Clean Bitcoins’ vs ‘dirty Bitcoins’ What is fungibility? Fungibility is […]
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What is a cryptocurrency exchange?
Many of us have heard about cryptocurrencies such as Bitcoin, Dogecoin, and Ether. But, what is a cryptocurrency exchange, and how does it function? In a nutshell, a cryptocurrency exchange is a platform that enables investors to buy or sell a particular cryptocurrency in exchange for fiat money (dollars, pounds, euros, etc.) or another cryptocurrency. […]
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NFT meaning, marketplaces, and scams
In this post, we offer a beginner’s guide to NFTs. We explain the meaning of an NFT and how NFTs are be traded in marketplaces. We also discuss various types of NFT scams. Jump to: What does NFT mean? NFT marketplaces NFT scams Final word on NFTs What does NFT mean? NFT is an acronym […]
