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Cheatography

markets Cheat Sheet (DRAFT) by

foundational algebra.

This is a draft cheat sheet. It is a work in progress and is not finished yet.

cardinals

sizing too big in volatile markets is the biggest sin of the financial markets (you could be right about the longterm trends however you get smashed due to your position size and volati­lity)

building efficiency

occupancy rate =
occupied space / total space ​ ×100%. (above 80% is good)
space utilis­ation ratio =
usable space / total space ​ ×100%.
cost per square foot (sq) =
total cost of property / total square footage
 

keys

it is better to observe what govern­ments do rather than listen to what they say*
 

geometric nature of return

geometric return: compou­nding effect, where your returns grow on the returns that have already been earned. (snowb­alling down a hill, picking up more snow as it goes.)
geometric mean: the nth root of the product of n numbers, used to find the central tendency in multip­lic­ative datasets.

determ­ining the culprit

who is interested + who is capable
cui prodest scelus is fecit (for whom the crime advances, he has done it)
folllow the trail, cui bono?

counte­rparty risk

the potential for one party in a financial transa­ction to default or fail to meet its obliga­tions, leading to financial losses for the other party.

capital ratios

category
descri­ption
range
poor
capital ratio is below regulatory minimums, indicating signif­icant risk of insolvency and inability to absorb losses. Bank may face regulatory scrutiny and potential interv­ention.
less than regulatory minimum
below average
capital ratio meets regulatory minimums but is at the lower end of the spectrum. Bank has limited buffer against losses and may struggle during economic downturns.
regulatory minimum to below 8%
average
capital ratio meets regulatory requir­ements but does not provide a substa­ntial cushion against risks. Bank's stability may be adequate but lacks robustness for unforeseen challe­nges.
8% to below 10%
above average
capital ratio exceeds regulatory minimums, providing a reasonable buffer against risks. Bank is better positioned to absorb losses and maintain stability in various economic condit­ions.
10% to below 12%
good
capital ratio is comfor­tably above regulatory requir­ements, indicating strong financial health and resili­ence. Bank can withstand adverse events and has capacity for growth and innova­tion.
12% to below 15%
excellent
capital ratio signif­icantly exceeds regulatory minimums, demons­trating except­ional financial strength and risk manage­ment. Bank is well-p­repared for unexpected shocks and has ample capacity for expansion and invest­ment.
15% and above