Effective Annual Rate (EAR)
An effective annual rate is a return earned or paid on the investment, loan, or other financial product over time. EAR’s other synonyms are the effective yield or net …
Investment Decisions
Value Additivity: Meaning, Uses of the Principle, Limitations and More
Value Additivity: Meaning The Value Additivity Principle is a financial principle that says that the total value of a group of assets is equal to the total value of …
Earnings Credit Rate (ECR) – Meaning, Features, Benefits and More
Earnings Credit Rate or ECR is the interest that a bank gives to the customers in the form of a discount. Banks calculate ECR on the money that customers …
Greenfield Investment Strategy: Meaning, Advantages, Disadvantages, Examples and More
Greenfield Investment Strategy: Meaning A greenfield project is where the entire project has to start from scratch. And everything from planning to implementation is new. In international trade and …
Adverse Selection – Meaning, Drawbacks and More
Adverse selection is the situation of asymmetric information. Or, we can say it is when either the buyer or seller has some information on the product that the other …
Treynor Ratio – Meaning, Formula, Importance and More
What is a Treynor Ratio? The Treynor Ratio concept was developed by Jack Treynor, an American economist who was known as a scholar of Investment Management. Treynor Ratio is …
Discounted cash flow
Meaning of Discounted cash flow Discounted cash flow analysis makes use of forecasted cash flows of a company to discount them to its present value. It makes an assumption …
Annuity Formula
Annuity formula as a standalone term could be vague or ambiguous. It can be either ‘present value annuity formula‘ or ‘future value annuity formula‘. Before we learn how to …
Annualized return on investment
Meaning of Annualized return on investment Return on Investment or ROI is a financial ratio that shows the return received from a business investment or a series of investments. …
Terminal Value
Meaning of Terminal Value Terminal Value is the present value of all future cash flows of a business or a project with an assumption of a stable growth rate …
