This category covers all kinds of topics in finance including corporate finance and financial management. The topics on financial institution and stock exchange will also be included.
What is meant by Cost of Capital? Cost of Capital can be defined as the company’s calculation of the minimum amount of return that is required that would be necessary in order for a process to be considered acceptable. The concept of cost of capital is mostly used when undertaking, or further justifying a capital …
Definition of WACC Weighted Average Cost of Capital is defined as the company’s cost of capital that is calculated using debt and equity. It can be defined as the minimum required rate of return for the company before the organization makes any new investment. It encapsulates the average cost of capital that the company obtains …
Advantages and Limitations of Weighted Average Cost of Capital (WACC) Read More »
A share repurchase is a method where a company buys back its shares from its existing shareholders. Companies repurchase their shares to control the number of outstanding shares and hence key financial performance metrics. A company can use one of the top 4 methods of share repurchase arrangements discussed in detail below. Share Repurchase Arrangement …
4 Methods of Share Repurchase Arrangements – Explained Read More »
A put warrant is a company-issued contract to sell back stocks at a specified price and on or before a specific date. Put warrants can be issued independently but are often issued as a sweetener with a debt or equity instrument. Let us discuss what is a put warrant and how does it work. What …
Bear call spreads, or bear call credit spreads, are options strategies employed by options traders who expect the underlying assets price to decline in the future. So, it’s a bearish approach because the expectation is about a decrease in the price for underlying assets. Further, it’s a credit spread because the net premium received is …
Bull put spread is an options strategy; it’s suitable for the traders that want to limit their loss. However, it comes with restricted profitability. In this article, we shall discuss detailed characteristics of the strategy, including opening the position. An investor uses a bull put spread when they believe the underlying asset will rise moderately …
Credit spreads and debit spreads are the strategies to trade-in options. In the title context, the spread is a difference between receipt and payment of the premium on writing/purchasing options. So, if the receipt is higher than payment on exchange of options, it’s called credit spread. On the other hand, if payment is higher than …
Credit Spreads vs debit spreads: What are the Differences? Read More »
Options are a derivate instrument, and their value is dependent on the underlying assets. It’s used to realize speculation on the movement of an underlying asset. If the price of the underlying asset moves in expectation of the buyer of the options, it generates a financial return for them. The other side movement can lead …
What are credit spread options? Butterfly and Condor strategy of options Read More »
Definition Credit spread refers to the yield differences between two bonds of the same maturity and different credit quality. One of the bonds is typically set as a benchmark. For instance, one bond can be a US Treasury bond (benchmark), and the other can be a corporate bond; there is an expected yield difference between …
What is Credit Spread? Definition, Formula, Example, Interpretation, and More Read More »
The cash operating cycle is the time taken by the business to realize its cash investment. In simple words, the business has to invest cash in purchasing the raw material, labor, overheads, and other business-related operations. However, it takes time for the business to realize cash, and holding of cash incurs finance expenses. Hence, businesses …
