A Beginner's Guide To Hedging. Although it sounds like your neighbor's hobby who's obsessed with his topiary garden full of tall bushes shaped like giraffes and dinosaurs, hedging is a practice every investor should know about. There is no arguing that portfolio protection is often just as important as portfolio appreciation. Like your neighbor's obsession, however, hedging is talked about more than it is explained, making it seem as though it belongs only to the most esoteric financial realms. Well, even if you are a beginner, you can learn what hedging is, how it works and what hedging techniques investors and companies use to protect themselves. What is hedging. CONCEPTS OF LEVERAGES & COST OF CAPITAL. What do people mean when they say debt is a relatively cheaper form of finance than equity? In this case, the "cost" being referred to is the measurable cost of obtaining capital.
With debt, this is the interest expense a company pays on its debt. With equity, the cost of capital refers to the claim on earnings which must be afforded to shareholders for their ownership stake in the business. For example, if you run a small business and need $40,000 of financing, you can either take out a $40,000 bank loan at a 10% interest rate or you can sell a 25% stake in your business to your neighbor for $40,000.
Suppose your business earns $20,000 profits during the next year. If you took the bank loan, your interest expense (cost of debt financing) would be $4,000, leaving you with $16,000 in profit. What is Leverage? Operating and Financial Leverage. Leverage, as a business term, refers to debt or to the borrowing of funds to finance the purchase of a company's assets.
Business owners can use either debt or equity to finance or buy the company's assets. Using debt, or leverage, increases the company's risk of bankruptcy. It also increases the company's returns; specifically its return on equity. What is the Risk of Having an Excessive Amount of Financial Leverage? Important Financial Concepts: Operating Leverage, Financial Leverage and the Cost of Capital Translate Synonyms, Translate Antonyms. Concept of Cost of Capital - Importance and Calculation. Concept of Cost of Capital Capital refers to the funds invested in a business.
The capital can come from different sources such as equity shares, preference shares, and debt. All capital has a cost. The Concept of Operating Leverage. Most business people who borrow money are familiar with the term financial leverage.
Financial leverage, expressed as the ratio of debt to equity (L = D/E), refers to the magnitude that a business is financed by debt versus equity. The more debt the greater the financial leverage. The 10 Best Games for Learning About the Stock Market. Much like skydiving, playing the stock market is not an activity you want to learn through your mistakes.
Fortunes are made and lost all the time by people who think (or thought) they had a handle on stock trading. If you have a few million you can afford to lose, or you're investing with someone else's money (you're a bank, in other words), by all means, jump right in. But for the other 99%, we recommend simulating the experience of stock market investing first, to learn what to do and not do with your hard-earned cash. Here are the 10 best games to help you do that. WeSeed:While some of the games on this list may be more concerned with purveying entertainment than education, WeSeed's No. 1 goal is to teach people about the stock market and take the fear out of investing.
Create a Killer Business Plan - Martha Stewart Community. You've got the idea, now package it well!
The way you present your company and vision will determine whether you get the right financial partners and the right deal. Marketing Your IdeaLife is marketing. We're constantly being pitched to as consumers, yet we also market our products, our ideas, and ourselves personally and professionally. But where do so many early-stage entrepreneurs go wrong? They fail to sell their start-up effectively. 15 Things I Look at Before Trading a Stock. I recently shared my stock trading analysis template along with my recent moves on the stock market.
Today, I’ll be sharing my list of 15 things I look at before trading stocks. Money, Money, Money. Part of materialism by Philip Greenspun; updated July 2015 Site Home : Materialism : One Article "When young people ask me about the law as a career," said one litigator, "I tell them that in this country whom they choose to have sex with and where they have sex will have a bigger effect on their income than whether they attend college and what they choose as a career.
" -- Real World Divorce, Introduction How to Get Rich "There are three ways to make money. You can inherit it. A young man asked an old rich man how he made his money. Most people who are rich chose their parents wisely. 10 Biggest Entrepreneurs of 2011. Embed this infographic on your site!
<a href=" src=" alt="10 Biggest Entrepreneurs of 2011" width="500" border="0" /></a><br />From: <a href=" Do a quick search for important entrepreneurs. Small Business Ideas and Resources for Entrepreneurs.