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.
In investing terms, the margin is the money borrowed by the investors for making an investment or transaction. Particularly in stock and derivative markets, the investors utilize leverage allowed by the broker and clearing houses. These clearing houses and brokers require investors to maintain a certain minimum balance in their margin accounts. What is the […]
What is the Maintenance Margin? Definition and How it Works? Read More »
What is a Standby Letter of Credit? A standby letter of credit is a secondary payment instrument. It acts as an additional layer of security to the suppliers (the second party) in case of non-performance of the contract. The issuing banks offer an additional cushion to the receivers of LC on default payments. These are
Standby Letter of Credit: Everything You Should Know About! Read More »
A letter of Credit is a documentary credit that an issuing bank guarantees to the suppliers if the buyers default on payment. Banks become intermediary parties between the sellers and buyers, usually in international trade contracts. However, the documentary credit or LC contracts are different documents from the original sales contract. Depending on LC characteristics,
Revocable Letter of Credit: Definition and How it Works? Read More »
Small and medium-sized businesses often struggle to cope with lower liquidity. Cash crunch proves a tangling problem than profitability. Delayed accounts receivables and uncertain economic conditions affect the cash flows for small businesses in particular. Small businesses funded with a limited contributed capital cannot raise financing from capital markets such as stock or bond markets.
Short-Term Financing Options for Small Businesses Read More »
There are two sources of finance for any business; Equity and Debt. Debt financing can further be categorized as long-term and short-term financing facilities. Short-term financing is a widely used option for funding business operational activities. Many businesses struggle with delayed accounts receivable and lack of cash and look for bank financing. What is Short-Term
What is Short-Term Financing? All You Need to Know! Read More »
Commercial papers are alternative short-term financing sources for the borrowers. Commercial papers are usually issued to raise funds outside of the primary markets i.e. the stock exchanges. What is Euro Commercial Paper? Euro Commercial Paper (ECP) is a short-term debt instrument that is issued in a currency other than the local currency of the issuer.
Euro Commercial Paper: All You Need to Know About! Read More »
The cost of capital of a company represents the opportunity costs of the funds available to it for investing in different projects. Similarly, it can be defined as the required rate of return, which is a vital part of the capital budgeting process of a company. Companies need the cost of capital to evaluate different
Weighted Marginal Cost of Capital (WMCC) Read More »
Debt is a type of finance that companies from third-parties, such as financial institutions. It is a great source of finance to fund large acquisitions that companies may not be able to afford in other circumstances. In a debt arrangement, there are only two parties involved, the borrower and the lender. In the case of
How to Calculate Cost of Debt? All You Should Know! Read More »
There are many different sources of finance that businesses can use to fund their operations. The main types of finance that they may use include equity and debt. However, each type of finance may come with its costs for the business. Usually, equity is more expensive because it is long-term and, therefore, the business must
How to Calculate Cost of Equity? Read More »
The capital structure of a company represents the combination of equity and debt it uses to finance its operations and growth. Equity mainly comes from the payments received from shareholders. These shareholders receive shares in exchange, which gives them ownership of a specific portion of the company. Debt, on the other hand, is the finance
How to Calculate Weighted Average Cost of Capital (WACC)? Read More »
