Trade Lifecycle: The Process of Buying and Selling Securities
What Is the Trade Lifecycle? The trade lifecycle is the end-to-end process for buying or selling securities in financial markets. The trade lifecycle includes initiation, order matching, trade capture, confirmation, custodian instructions, clearing, and settlement. The lifecycle of a trade demonstrates how capital markets move securities and cash between buyers and sellers through a coordinated...
Price to Free Cash Flow Multiple (P/FCF Multiple): Definition, Formula, and Example
What is the Price to Free Cash Flow Multiple? The P/FCF multiple measures how much investors pay for each dollar of free cash flow available to shareholders. The formula is P/FCF = Market Cap ÷ Free Cash Flow to Equity (FCFE). This comparative valuation metric focuses on actual cash generation rather than accounting earnings, making...
Price Multiples: Types, Formulas, and Examples
What Are Price Multiples? Price multiples are financial ratios that compare a company’s stock price to a measure of its financial performance, such as price-to-earnings (P/E) or price-to-cash flow (P/CF). Price multiples provide investors and analysts with a simple, market-based benchmark of valuation. Price multiples are commonly used in relative valuation, where a company’s financial...
Real Assets vs. Financial Assets: Complete Guide
Real Assets vs. Financial Assets: What’s the Difference? Real assets are physical, tangible investments like real estate and commodities, while financial assets are intangible contracts like stocks and bonds. Real assets derive value from their physical properties, while financial assets get value from contractual claims or ownership rights. Real assets versus financial assets represent the...
Global Alternative Reference Rates
What is an Alternative Reference Rate? An alternative reference rate (ARR) is a standard reference rate used to price financial instruments, such as bonds, derivatives, and other securitized financial instruments. Alternative reference rates provide more transparent and reliable benchmarks and replacements for historical benchmarks like LIBOR. This guide covers five of the most widely used...
