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Banking Essentials - Part I

This pathway will walk us through the basics of banks, starting with some of the different types and their main functions, then starting to look at the regulation faced by the banks, both before and after the Global Financial Crisis.

Greenwashing

Greenwashing is the act of distributing false information about something being more environmentally friendly than it actually is.

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Expert led content

+1,000 expert presented, on-demand video modules

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Keep track of learning progress with our comprehensive data

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Testing & certification

Gain CPD / CPE credits and professional certification

Managed learning

Build, scale and manage your organisation’s learning

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Connect Finance Unlocked to your current platform

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Tackling the Cost of Living Crisis

In this video, Max discusses the cost-of-living crisis currently enveloping the UK. He examines its impact on households as well as the overall economy.

CSR and Sustainability in Financial Services

In the first video of this two-part video series, Elisa introduces us to sustainability. She begins by looking at the difference between sustainability and corporate social responsibility, two terms that can be easily confused.

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Book a demo

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Exponentially Weighted Moving Averages

Exponentially Weighted Moving Averages

Abdulla Javeri

30 years: Financial markets trader

In the previous video, Abdulla covered simple or arithmetic moving averages. Here, Abdulla explains a similar concept: the weighted and exponential moving averages. He answers the questions: what are they, how are they calculated and how are they used?

In the previous video, Abdulla covered simple or arithmetic moving averages. Here, Abdulla explains a similar concept: the weighted and exponential moving averages. He answers the questions: what are they, how are they calculated and how are they used?

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Exponentially Weighted Moving Averages

5 mins 11 secs

Key learning objectives:

  • Understand the difference between a simple moving average and an exponentially weighted moving average

  • Define the impact the decay rate might have on the output calculation

Overview:

The exponentially weighted moving average places differing weights on historic data. The rate at which the weights exponentially decrease is defined as the decay rate.

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Summary

What is the difference between a simple moving average and an exponentially weighted moving average?

The fundamental difference between a simple moving average and a weighted moving average is that in the latter each data point is given its own weight so the newest data has a greater weight than the oldest data. It’s a way of saying that recent moves are more relevant than older ones. This makes sense especially as various averages are used to forecast future returns.

We often hear end of year ‘forecasts’ for equity indices. The pension industry uses forecasts of future returns to calculate expected levels of pensions. It could be argued that these aren’t actually ‘forecasts’, rather they are a central expectation of future returns, which usually turn out to be inaccurate.

How does the exponentially weighted moving average change over time?

There is a specific type of moving average that’s normally used in the markets and that’s the exponentially weighted moving average, EWMA.  In an exponentially weighted moving average, the weights decay smoothly, exponentially.

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Abdulla Javeri

Abdulla Javeri

Abdulla’s career in the financial markets started in 1990 when he entered the trading floor of the London International Financial Futures Exchange, LIFFE, and qualified as a pit trader in equity and equity index options. In 1996, Abdulla became a trainer for regulatory qualifications and then for non-exam courses, primarily covering all major financial products.

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