Industry WIKI

Credit market imperfections (known academically as capital market imperfections) are limitations that reduce the range of financial contracts that can be signed or honored. There are three main theoretical drivers of imperfection: First, lenders do not have full information about the borrower, whether they have the capacity to pay back their debt and/or whether they are willing to pay (a

In financial mathematics, the put–call parity defines a relationship between the price of a European call option and European put option, both with the identical strike price and expiry, namely that a portfolio of a long call option and a short put option is equivalent to (and hence has the same value as) a single forward contract at this strike price and expiry. This is because if the p

In financial economics, rational pricing is the assumption that asset pricing models must reflect the arbitrage-free price of the asset

In mathematical finance, a risk-neutral measure (also called an equilibrium measure, or equivalent martingale measure) is a probability measure such that each share price is exactly equal to the discounted expectation of the share price under this measure.

In finance and economics, systematic risk (in economics often called aggregate risk or undiversifiable risk) is vulnerability to events which affect aggregate outcomes such as broad market returns, total economy-wide resource holdings, or aggregate income. In many contexts, events like earthquakes, epidemics and major weather catastrophes pose aggregate risks that affect not only the dis