Yield to Maturity-YTM and Yield to Call-YTCYield to Maturity-YTM and Yield to Call-YTCYield to Maturity-YTMYield to maturity (YTM) is the most widely used measure of return on the bond. It is the compounded rate of return an investor expects to receive from a bond purchased at the current market price which he holds till maturity. On the other hand, it may be termed as an … [Read more...] about Yield to Maturity-YTM and Yield to Call-YTC
Finance
General Expressions of Bond Returns
General Expressions of Bond Returns. Bond Yields and Prices: Bond returns can be calculated in many ways though they are prefixed. The followings are general expressions of bond returns which are usually found in the securities markets.General Expressions of Bond ReturnsCoupon RateIt is the fixed annual interest rate affixed on the face of the bond and is calculated on … [Read more...] about General Expressions of Bond Returns
Beta and its Characteristics
Beta and its Characteristics. [ Beta ] - In finance, the beta (β or beta coefficient) of an investment indicates whether the investment is more or less volatile than the market. In general, a beta less than 1 indicates that the investment is less volatile than the market, while a beta of more than 1 indicates that the investment is more volatile than the market. Volatility is … [Read more...] about Beta and its Characteristics
On Price Earning Ratio – Most Widely Used Tools for Stock Selection
On Price Earning Ratio. Price earning ratio is the more widely used method of estimating stock price. PE ratio / Price Earning Ratio is one of the most widely used tools for stock selection. It is calculated by dividing the current market price of the stock by its earning per share (EPS). A stock is said to be worth some multiple of its future earnings indicating that an … [Read more...] about On Price Earning Ratio – Most Widely Used Tools for Stock Selection
Difference between Money Market and Capital Market
Difference between Money Market and Capital Market.Money Market can be defined as financial instruments with high liquidity and very short maturities are traded. Basically used by participants as a means for borrowing and lending in the short term, from several days to just under a year. Money market is treated as a safe place due to the highly liquid nature of securities … [Read more...] about Difference between Money Market and Capital Market
Difference between Systematic and Unsystematic Risk
Difference Between Systematic and Unsystematic Risk.Before identifying the differences between systematic risk and unsystematic, we should have a clear understanding of these mentioned terminologies. However, they are defined as below:Difference Between Systematic and Unsystematic RiskSystematic riskNon-diversifiable risk is called systematic risk. It is the portion of … [Read more...] about Difference between Systematic and Unsystematic Risk
Systematic Risk and Unsystematic Risk – Meaning and Components
Systematic Risk and Unsystematic Risk. All investors must know the difference between systematic and unsystematic risk because it will help them to take effective investment decision making. In a broader sense, all types of risk can be categorized into two types; one is a systematic risk which is the non-diversifiable risk and the other is an unsystematic risk or non-systematic … [Read more...] about Systematic Risk and Unsystematic Risk – Meaning and Components
Vocabulary associated with Option
Vocabulary associated with Option.The will use exercise the option only if it is profitable, otherwise, the option can be thrown away.Followings are the vocabulary associated with the option:Vocabulary associated with OptionStrike price:The fixed price specified in the option contract at which the option holder can buy or sell the underlying asset can be defined as a … [Read more...] about Vocabulary associated with Option
Types of Options in Finance
Types of Options in Finance: Let start with a definition of Option. An option can be defined as the right to the holder, (but not the obligation) to buy or sell a given quantity of an asset on or before a given date in future, at prices agreed upon today. Many corporate securities are similar to the stock options that are traded on organized exchanges. Almost every issue of … [Read more...] about Types of Options in Finance
Valuation Concepts – 5 Most Important Valuation Concepts
Valuation Concepts: Valuation is based on economic factors, industry variables, and an analysis of the financial statements and the out look for the individual firm. The purpose of a valuation is to determine the long-run fundamental economic value of a specific company’s common stock. When a firm is considering the purchase of marketable securities- debt, preferred stock or … [Read more...] about Valuation Concepts – 5 Most Important Valuation Concepts