Financial Theories

As someone deeply immersed in the world of finance and accounting, I find Shiller’s Volatility Theory to be one of the most compelling frameworks for understanding market behavior. Developed by Nobel laureate Robert J. Shiller, this theory challenges traditional notions of market efficiency by emphasizing the role of human psychology and irrational behavior in driving […]

As someone deeply immersed in the world of finance and investing, I often find myself explaining the importance of evaluating investment performance beyond just returns. One of the most powerful tools I use for this purpose is the Sharpe Ratio. Named after Nobel laureate William F. Sharpe, this metric helps investors understand how much return

Corporate governance has long been a battleground for competing ideologies. On one side, we have shareholder financial primacy, a doctrine that prioritizes the financial interests of shareholders above all else. On the other, stakeholder theory advocates for a more inclusive approach, considering the interests of employees, customers, suppliers, and the broader community. In this article,

The share market, often referred to as the stock market, is a complex and dynamic system that plays a pivotal role in the global economy. As someone who has spent years studying and analyzing financial markets, I find the share market to be one of the most fascinating subjects in finance. In this article, I

As someone deeply immersed in the world of finance and accounting, I have always been fascinated by the ways in which mathematical theories can illuminate the complexities of financial markets. One such theory that has profoundly influenced my understanding is Shannon’s Information Theory. Originally developed by Claude Shannon in 1948 to address problems in communication

As someone deeply immersed in the world of finance and accounting, I find the Sequential Exchange Theory (SET) to be one of the most intriguing frameworks for understanding how financial transactions and market dynamics unfold over time. This theory, though not as widely discussed as some other financial models, offers a unique lens through which

Separation theory is a cornerstone of modern finance, offering profound insights into how individuals and firms make investment and financing decisions. In this article, I will delve deep into the concept, its mathematical foundations, practical applications, and its relevance in the US financial landscape. My goal is to provide a clear, detailed, and accessible explanation

Financial literacy is a cornerstone of personal and economic well-being. Yet, despite its importance, many Americans struggle with basic financial concepts. According to a 2022 survey by the National Financial Educators Council, only 57% of adults in the U.S. could pass a basic financial literacy test. This gap in knowledge often leads to poor financial

As someone deeply immersed in the world of finance and accounting, I often find myself explaining complex theories to students, colleagues, and clients. One such theory that consistently sparks interest—and sometimes confusion—is the Security Market Line (SML). Today, I want to take you on a deep dive into the SML, breaking it down into digestible

Securitization is a financial innovation that has reshaped how risk is managed, distributed, and understood in modern markets. As someone deeply immersed in finance and accounting, I find securitization to be one of the most fascinating yet complex mechanisms in the financial world. In this article, I will explore the theory behind securitization, its role