Understanding Investment Management

Investment management firms manage the portfolios of individuals, partnerships, corporations, corporate and public retirement plans, non-profit entities and endowments. These portfolios can be invested in individual stocks and bonds, mutual funds, outright ownership of property or commodities, foreign exchange and the futures markets. Deciding the mix, scope and concentration of a portfolio under management is … Continue reading Understanding Investment Management

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Calculating Different Types of Annuities

Definition An annuity is a series of payments required to be made or received over time at regular intervals. The most common payment intervals are yearly (once a year), semi-annually (twice a year), quarterly (four times a year), and monthly (once a month). Some examples of annuities: Mortgages, Car payments, Rent, Pension fund payments, Insurance … Continue reading Calculating Different Types of Annuities

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The Power of Compounding – Interest Examples

Time exerts the greatest influence on your investment portfolio than any other force. Through the power of compounding, a small amount of money over time can grow into a substantial sum. Compounding is an investor’s best friend. Investments can increase in value over time – and the longer the time frame, the greater the value. … Continue reading The Power of Compounding – Interest Examples

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Perpetuities – Definition & Calculation

Perpetuity Definition: A perpetuity is an annuity that provides payments indefinitely. Since this type of annuity is unending, its sum or future value cannot be calculated. Examples of perpetuity: Local governments set aside monies so that funds will be available on a regular basis for cultural activities. A children’s charity club set up a fund … Continue reading Perpetuities – Definition & Calculation

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Standard Deviation — Definition & Calculation

Definition: Standard deviation is a measure of how far apart the data are from the average of the data. If all the observations are close to their average then the standard deviation will be small. How to calculate standard deviation:Suppose that an investor has $600 to invest and is considering investing all of it in … Continue reading Standard Deviation — Definition & Calculation

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Information Asymmetry

An economy is said to be characterized by information asymmetry when some parties to business transactions may have an information advantage over others. Types of information asymmetry The first is adverse selection. Adverse selection occurs because some persons, such as managers and other insiders know more about the current condition and future prospects of the … Continue reading Information Asymmetry

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