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.
Short selling or shorting of stocks means trading borrowed shares. Traders make transactions of stocks or other securities they do not own in the first place. They use margin accounts that provide them leverage to buy shares without investing the full amount required. Traders and speculators do short selling for making profits. Investors and institutes […]
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Leverage is the term used for funding a project through debt financing. A leveraged buyout is the use of borrowed capital to acquire a company. Private Equity firms actively perform LBOs to acquire public companies, convert them to private firms, and then sell them off. An LBO is one of the several types of mergers
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In order to calculate the value of common stock, we first need to know the cost of common stock equity. In this article, we cover how to calculate the cost of common stock equity by using two common models. These are the constant-growth valuation model and the capital asset pricing model. Now let’s get started!
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Preferred stock is one special type of stock that provides constant dividends similar to interest income. The preferred stockholders have a special right to receive their stated dividends before the earnings can be distributed to the common stockholders. In order to calculate the value of the preferred stock, we first need to know the cost
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Every investment come with risk associated with them. Some of them might be diversifiable and some others might be nondiversifiable. Nondiversifiable risk of an investment or security typically incurs as a result of not being able to diversify through multiple portfolio. In this article, we cover the nondiversifiable risk associated with investment or security including
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Suppose you put 10,000 in a saving account with the interest of 8% and keep it there for 5 years. What would the future value at the end of year 5? With a single investment like this, its expected value at the end of year 5 is called the future value (FV) of a single
Future Value (FV) of a Single Amount: Definition, Formula, and How to Calculate It Read More »
In the previous article, we have covered the future value of a mixed stream cash flow. In this article, we cover the present value of a mixed stream cash flow. The calculation is similar except for the use of the discounting factor in order to discount each cash flow to year zero. In this article,
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Future value of a mixed stream cash flow is simple to calculate. It represents the future sum of returns that we will get at the future date. In this article, we cover the definition of the future value of a mixed stream cash flow, how to calculate it with example calculation as well as how
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In the previous article, we have covered the present value of an ordinary annuity. In this article, we cover the present value of an annuity due in detail. This includes the definition, how to calculate it with the example, the present value of an annuity due table as well as the comparison between the present
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Present value (PV) of an ordinary annuity is a measure of how much value of money now for periodic equal future cash flows at a given interest rate and timeframe. In this article, we cover the definition of the present value of an ordinary annuity, how to calculate it by using different methods as well
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