Archive | Finance Edge

Arbitrage Pricing Theory (APT)

The Arbitrage Pricing Theory(APT) is a model which financial analysts use to determine how much an asset is worth based on the study of the relationship that exists between that asset and existing risk factors.

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Bandwagon Effect

A Bandwagon Effect (Cromo Effect) refers to a situation in which people follow a certain course or trend because most of the people are following that, and not necessarily due to their own thought processes or individual opinions.

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Arm’s Length Transaction

An arm’s length transaction simply refers to a type of transaction which is conducted between two parties who claim to be unrelated (although they are) for the purpose of avoiding a conflict of interest which may arise during the transaction.

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Bilateral Credit Limit

Bilateral credit limit is a limit set by the mutual agreement of two institutions regarding the payments they will accept from each other on a daily (intraday) basis.

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