Components of Cost of Capital
The cost of capital or required rate for return a firm can be defined as the composite cost of the firm’s financing components. The cost…
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Importance and Necessity of Cost of Capital
Cost of capital: The cost of capital or required rate for return a firm can be defined as the composite cost of the firm’s financing…
Factors that affect Cost of Capital are generally beyond firm’s control
The cost of capital or required rate for return a firm can be defined as the composite cost of the firm’s financing components. The cost…
Why debt is called as the cheapest source of finance?
When a company borrows money from persons or any other financial institution that creates liability for the company is called debt. Simply, it is a…
Debt – Definition
Debt: When a company borrows money from persons or any other financial institution that creates liability for the company is called debt. Simply, it is…
Differentiate between Yield to Maturity (YTM) and Yield to Call (YTC)
The yield to maturity (YTM) is that discount rate which causes the present value of the promised payment stream to equal the current price of…
Dividend Discount Model (DDM)
Dividend Discount Model (DDM) The dividend discount model (DDM) is a method of valuing a company’s stock price based on the theory that its stock…
Why is Valuation an important concept to Financial Management?
The process of determining the value of an asset or company is called valuation. Valuations are needed for many reasons such as investment analysis, capital…
Preferred Stock Valuation
Preferred stock valuation: Preferred stocks promise a fixed dividend, sometimes forever but usually for a finite term. Perpetual preferred are those preferred that are expected…
Difference between Capital Market Line and Security Market Line
Capital Market Line is a theoretical concept that represents all the portfolios that optimally combine the risk-free rate of return and the market portfolio of…
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