What Is Stochastic Volatility? Stochastic volatility (SV) refers to the fact that the volatility of asset prices varies and is not constant, as is assumed in the Black Scholes options pricing model. Stochastic volatility modeling attempts to correct for this problem with Black Scholes by allowing volatility to fluctuate over time. Key Takeaways Stochastic volatility
What Are Stocks? A stock, also known as equity, is a security that represents the ownership of a fraction of the issuing corporation. Units of stock are called “shares” which entitles the owner to a proportion of the corporation’s assets and profits equal to how much stock they own. Stocks are bought and sold predominantly on
What is Stock Ahead? Stock ahead refers to a situation in which an order is placed, but not executed, because of a previously sent order involving the same price. Depending on the exchange’s priority rules, this can also happen when two bids or offers are made with identical prices. The orders are placed in a
What Is Stock Analysis? Stock analysis is the evaluation of a particular trading instrument, an investment sector, or the market as a whole. Stock analysts attempt to determine the future activity of an instrument, sector, or market. Understanding Stock Analysis Stock analysis is a method for investors and traders to make buying and selling decisions.
What Is a Stock Basher? The term stock basher refers to a person who engages in market manipulation to make the price of an asset fall. Stock bashers rely on misinformation campaigns to decrease confidence in a stock, leading to an undervaluation of that security. In some cases, a stock basher may have a position in
What Is a Stock Certificate? A stock certificate is a physical piece of paper that represents a shareholder’s ownership in a company. Stock certificates include information such as the number of shares owned, the date of purchase, an identification number, usually a corporate seal, and signatures. The certificates are most often a bit bigger than
What Is Stock Compensation? Stock compensation is a way corporations use stock options to reward employees. Employees with stock options need to know whether their stock is vested and will retain its full value even if they are no longer employed with that company. Because tax consequences depend on the fair market value (FMV) of
What Is a Stock Dividend? A stock dividend is a payment to shareholders that consists of additional shares rather than cash. The distributions are paid in fractions per existing share. For example, if a company issues a stock dividend of 5%, it will pay 0.05 shares for every share owned by a shareholder. The owner
What Is Static Gap? Static gap is a measure of exposure or sensitivity to interest rates, calculated as the difference between assets and liabilities of comparable repricing periods. Static gap measures the exposure or sensitivity to interest rates. It is the difference between assets and liabilities of comparable repricing periods. It can be calculated for short-term
What Is Statistical Arbitrage? In the world of finance, statistical arbitrage (or stat arb) refers to a group of trading strategies that utilize mean reversion analyses to invest in diverse portfolios of up to thousands of securities for a very short period of time, often only a few seconds but up to multiple days. Known
