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Tier 1 capital

Tier 1 capital is the core measure of a bank’s financial strength from a regulator’s point of view. It is composed of core capital, which ... more

Exact doubling time for an interest rate

For periodic compounding, the exact doubling time for an interest rate of r per period is a logarithmic formula, that can be used if we want to know the ... more

Effective interest rate

The effective interest rate, effective annual interest rate, annual equivalent rate (AER) or simply effective rate is the ... more

Security market line (SML)

Security market line (SML) is the representation of the capital asset pricing model. It displays the expected rate of return of ... more

Return over a single period

In finance, return is a profit on an investment. return is also used to refer to a profit on an investment, expressed as a proportion of the amount ... more

Degree of Financial Leverage

n finance, leverage is a general term for any technique to multiply gains and losses. Most often it involves buying more of an asset by using borrowed ... more

Rule of 72 (estimating an investment's doubling time)

Rule of 72 is a method for estimating an investment’s doubling time. The rule number 72 is divided by the interest percentage per period to obtain ... more

Black-Scholes formula - value of a call option for a non-dividend-paying underlying stock

The Black–Scholes /ˌblæk ˈʃoʊlz/ or Black–Scholes–Merton model is a mathematical model of a financial market containing derivative investment instruments. ... more

Periodic compounding

Compound interest is interest added to the principal of a deposit or loan so that the added interest also earns interest from then on. This addition of ... more

Tier 2 capital

Tier 2 capital, or supplementary capital, include a number of important and legitimate constituents of a bank’s capital base. (Undisclosed Reserves ... more

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