INVESTING ESSENTIALS

Investing Essentials Step 1: Determine Your Investment Goals– Identify your investment objectives and time horizon.- Determine your risk tolerance and desired return.- Consider your financial situation and cash flow. Step 2: Choose an Investment Strategy– Select an investment strategy that aligns with your goals and risk tolerance.- Common strategies include buy-and-hold, index funds, or active […]

Financial Plan A financial plan is a comprehensive document that outlines an individual’s financial goals and strategies for achieving those goals over a specific time frame. It typically includes the following components: 1. Financial Inventory:– Assets and liabilities- Current income and expenses- Debt and credit history 2. Financial Goals:– Short-term goals (e.g., emergency fund, new […]

Participatory Notes Participatory notes are a type of collaborative note-taking technique that involves multiple participants actively contributing to the note-taking process. They are often used in meetings, workshops, or collaborative learning environments. Key Features of Participatory Notes: Shared Ownership: Participants have equal ownership of the notes, contributing ideas, insights, and perspectives. Live Collaboration: Notes are […]

Compound Interest Formula: A = Pe(r/n)^(nt) where: A is the future value of the investment. P is the principal amount invested. e is the mathematical constant, 2.718281. r is the annual interest rate. n is the number of times interest is compounded per year. t is the number of years the investment is made for. […]

Definition: A financial instrument is a contract that represents the promise of payment or delivery of financial assets or liabilities in the future. It is a tangible or intangible asset that gives rise to a legally enforceable obligation to pay or receive payments or deliver or receive assets. Types of Financial Instruments: Debt securities: Bonds, […]

Book value is a theoretical value of a asset or liability based on its recorded book entry value. It is the cost of the asset or liability at the time it was acquired, minus any depreciation or amortization that has been taken. Formula: Book value = Cost – Depreciation or Amortization Example: A company purchased […]

Definition: A bonus issue is a distribution of additional shares of stock or other securities to existing shareholders as a reward or incentive. It is typically done to increase the company’s share price and attract new investors. Types of Bonus Issues: Cash bonus: Payment of a cash dividend in addition to the regular dividend. Stock […]

The hurdle rate is the minimum rate of return that an investment must generate in order to be considered acceptable. It is used to calculate the present value of an investment and is typically the cost of borrowing money. Formula: Hurdle rate = Discount rate that results in a present value of 1 equal to […]

A dealer is a person who acts as an intermediary between buyers and sellers in a market. There are different types of dealers, each specializing in a particular type of good or service. Here are some of the different types of dealers: Retail dealers: Sell goods directly to consumers. Examples include department stores, supermarkets, and […]

Mark-to-Market (MTM) Valuation Mark-to-market (MTM) valuation is a type of accounting valuation that involves valuing financial assets and liabilities at their current market prices. This is used to ensure that financial statements accurately reflect the true value of the company’s assets and liabilities. Key Principles of MTM Valuation: Arm’s Length Transactions: Assets and liabilities are […]