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
Category: Finance
Finance is the study of how individuals, businesses, and organizations manage money and investments. Our resources provide expert insights into a range of financial topics, including personal finance, corporate finance, and financial markets. With our help, you can develop the skills and knowledge you need to make informed decisions about investing, budgeting, and managing your finances for long-term financial health.
Understanding Corporate Finance
Corporate finance is the body of knowledge that dictates the decisions a company makes about its finances.
Optimizing Capital Structure
Consider the situation of a newly married couple. They have some savings but also have substantial credit card outstanding. They are planning to buy an apartment. How should they go about it? Should they pay off a portion of credit card outstanding first and then go for a low interest home loan? If they decide … Continue reading Optimizing Capital Structure
Bonds: Calculating Yield
When talking about bonds (especially when buying them) you have to take into consideration the yield of the bond. Simply put, a bond’s yield shows the relationship of the investment and the income. For the sake of comparability yield is always shown as an annualized (yearly) percentage. Current YieldAlthough we may know the coupon rate … Continue reading Bonds: Calculating Yield
Bonds: An Introduction
A bond is a type of debt security, where the issuer owes the holders a debt and is obligated to pay the coupon rate and face value back, together with other obligations, stated in the terms. This is the technical definition of bonds. Here we will help you familiarize yourself with the terms used in … Continue reading Bonds: An Introduction
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
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
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
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
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
Bond Valuation — Calculation
Bonds can be purchased at any time. To value the bond, the procedures differ depending on whether the bond is purchased on the date interest is regularly paid (interest date) or whether it is purchased “between interest dates”. How to calculate the Purchase Price of a Bond on an Interest Date Formula to be used: … Continue reading Bond Valuation — Calculation
Capital Budgeting – Procedure & Decision Process
Capital budgeting is the process by which the financial manager decides whether to invest in specific capital projects or assets. In some situations, the process may entail in acquiring assets that are completely new to the firm. In other situations, it may mean replacing an existing obsolete asset to maintain efficiency. During the capital budgeting … Continue reading Capital Budgeting – Procedure & Decision Process
