Financial Management

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…

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: When a company borrows money from persons or any other financial institution that creates liability for the company is called debt. Simply, it is…

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) The dividend discount model (DDM) is a method of valuing a company’s stock price based on the theory that its stock…

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 stocks promise a fixed dividend, sometimes forever but usually for a finite term. Perpetual preferred are those preferred that are expected…

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…

Bond valuation: It is a technique for determining the theoretical fair value of a particular bond. A bond generally provides a fixed stream of semiannual…

Yield to Call: The decision to call (or to refund) the issue is the effect of a potential call on a bond’s expected rate of…