What is rule of 72 and rule of 69?
Rule of 69 Use N = 69 when dealing with any continuous growth process, or when you have a periodic growth process and the rate…
Finance
Define time value of money
The time value of money theory states that a dollar that you have in the bank today is worth more than a reliable promise or…
What would be the likely effect on the required rate of return on equity?
Risk-averse investors will assign lower values to assets that have more risk associated with them than to otherwise similar assets that are less risky. The…
Difference between Systematic Risk and Unsystematic Risk
Systematic risk is affected by macro-economic factors such as variability of inflation, change in interest rate, and change in money supply. Unsystematic risk is affected by…
Difference between nominal rate and effective rate of interest
Difference between nominal rate of interest and effective rate of interest is given below: Nominal rate of interest: Nominal rate is an annual rate. The…
What is Trade Credit?
Trade Credit – An arrangement to buy goods or services on the account without making immediate cash payment. For many businesses, trade credit is an essential…
Cost of Commercial Papers
Commercial paper is a money-market security issued (sold) by large corporations to obtain funds to meet short-term debt obligations (for example, payroll), and is backed…
What is compensating balance?
Compensating Balance The financial accounting term restricted cash and compensating balances refers to monies that are reserved and not generally available to the company. Restricted…
Revolving Credit vs Line of Credit
Lines of credit and revolving credit are quite similar. These loan products are especially helpful for those building homes, remodeling, and paying off other debts.…
Types of Trade Credit
Trade Credit is an interim debt arising from credit sales and recorded as an account receivable by the seller and as an account payable by…
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