Equities

Momentum investing buys stocks with strong recent performance and sells those with weak performance, exploiting one of the most robust anomalies in finance. Learn how the momentum factor works, why behavioral biases drive it, and the crash risks that make it unsuitable as a standalone strategy.

The equity risk premium (ERP) is the expected excess return investors demand for holding stocks over risk-free government bonds, and it is the single most important input in asset pricing models like the CAPM and WACC.

The efficient market hypothesis (EMH) states that stock prices reflect all available information, making it impossible to consistently beat the market. Learn the three forms of market efficiency, evidence for and against EMH, and what it means for your investment strategy.

An IPO (initial public offering) is the first time a company sells shares to the public on a stock exchange. This guide covers the 7-step IPO process, the underpricing puzzle, lock-up periods, SPACs vs direct listings, dual-class share structures, long-run IPO performance, and how to evaluate newly listed stocks.

The Fama-French three-factor model extends CAPM by adding size (SMB) and value (HML) factors, explaining roughly 90% of diversified portfolio return variation versus approximately 70% for CAPM alone.

Dividend yield measures how much income a stock pays relative to its price. Learn the trailing and forward yield formulas, how to interpret yield by sector, and how to spot dangerous yield traps before they destroy your income stream.

The current ratio and quick ratio measure a company’s ability to meet short-term obligations. Learn the formulas, how to interpret liquidity ratios, and key differences between the current ratio, quick ratio, and cash ratio.

Learn how the price-to-book ratio measures what investors pay per dollar of net assets, why it is the primary valuation metric for banks, and how P/B connects to ROE.

The price-to-sales ratio (P/S) measures how much investors pay for each dollar of a companys annual revenue, making it the primary valuation metric for unprofitable high-growth companies where the P/E ratio is undefined.

Intrinsic value is the estimated true worth of a stock based on fundamental analysis. Learn how to calculate intrinsic value using DCF, DDM, and relative valuation methods, and how to apply the margin of safety principle to make better investment decisions.