Discounted cash flow
Investorline In finance, discounted cash flow (DCF) analysis is a method of valuing a project, company, or asset using the concepts of the time value of money. All future cash flows…
Weighted average cost of capital
The weighted average cost of capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets. The WACC…
Net present value
In finance, the net present value (NPV) or net present worth (NPW) of a time series of cash flows, both incoming and outgoing, is defined as the sum of the…
Modigliani–Miller theorem
The Modigliani–Miller theorem (of Franco Modigliani, Merton Miller) forms the basis for modern thinking on capital structure. The basic theorem states that, under a certain market price process (the classical…
Issues influencing Asset allocation
Volatility Investments vary in the extent of their potential losses or gains. Stocks are prone to greater rises and falls than would be experienced in cash deposit investments. The level…
Debt Finance and Equity Finance – The Two Pillars of Modern Finance
Financing activity for most ventures are either debt financing or equity financing. Once an investor has decided to engage in financing any business venture or project, he has three concerns…
Return on Investments
The concept of a return on investment is designed to balance all three perils. In finance there are actually two returns: the return of investment and the return on investment.…
What is Finance?
Finance is a branch of economics, a science that studies the management of funds (money and other assets). More specifically, through financial analysis, decisions and corrective actions can be taken…
Paper trading
Paper trading (sometimes also called "virtual stock trading") is a simulated trading process in which would-be investors can ‘practice’ investing without committing real money. This is done by the manipulation…
Spread trade
In finance, a spread trade is the simultaneous purchase of one security and sale of a related security, called legs, as a unit. Spread trades are usually executed with options…