Finance

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.

Advantages and Limitations of Weighted Average Cost of Capital (WACC)

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 …

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4 Methods of Share Repurchase Arrangements – Explained

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 …

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What is Bull Put Spread?

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 …

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Credit Spreads vs debit spreads: What are the Differences?

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 …

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What are credit spread options? Butterfly and Condor strategy of options

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 …

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What is Credit Spread? Definition, Formula, Example, Interpretation, and 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 …

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