Sortino Ratio Explained: Why Downside Risk Beats Sharpe
The Sortino ratio measures returns per unit of downside risk, not total volatility. Here is the formula, a worked example, and when to use it.
investing basics
Value at Risk Explained: How Banks Measure Tail Risk
Value at Risk turns a portfolio’s potential loss into one number. Here is how the three methods work, why VaR misses the tail, and what regulators use instead.
Cash Conversion Cycle Explained: DSO, DIO, DPO
The cash conversion cycle measures how many days a company’s cash is tied up in operations. Here is the formula, a worked example, and why negative CCC is the holy grail of working capital.
Maximum Drawdown Explained: The Real Risk No Average Captures
Maximum drawdown is the worst peak-to-trough loss a portfolio has taken – the single number that captures the pain volatility hides.
DuPont Analysis Explained: 3-Step and 5-Step ROE
DuPont analysis splits return on equity into margin, asset turnover, and leverage so you can see whether a high ROE comes from operating skill, capital efficiency, or just borrowing.
CAPE Ratio Explained: When Stocks Are Truly Expensive
Shiller PE sits near 41, second only to the 1999 peak. What CAPE measures, when it works, when it misleads, with verified historical data.
Capital Structure Waterfall: Who Gets Paid First in Default
Senior debt, subordinated bonds, preferred stock, common equity — here is the exact order claims get paid when a company defaults, with the GM 2009 worked example.
Options Greeks Explained: Delta, Gamma, Theta, Vega, Rho
What delta, gamma, theta, vega, and rho actually measure — with worked examples, typical ranges, and the mistakes traders make.
Bond Duration Explained: Why a 1% Rate Move Wrecks Long Bonds
Duration is the single number that explains why a 30-year Treasury can lose roughly 16% in a year when yields rise 1%. Here is how it works, with current data.
Carry Trade Explained: How It Works and Why It Blows Up
How the carry trade works in plain English: borrow in a low-rate currency, invest in a higher-yielder, pocket the spread — and what causes the unwinds.