## Saving for Retirement

Early Saving for Retirement Start saving for retirement early, even if you can only afford to put a small amount into your retirement fund each month. Mutual Fund A Mutual…

## NPV Analysis

NPV Analysis What is Discount Rate? The discount rate, as we said before this is, in general, the cost of capital. We're going to discuss a little bit later that there…

## Project Evaluation

Project Evaluation Today we are going to talk about a project evaluation. As you will remember, sessions three and four, had to do with the estimation of the cost of capital. That cost…

## The Debt Tax Shield

The Debt Tax Shield All right, so let's start with the corporate tax rate, and this is just a very brief example that will show you the tax shelter, the tax break…

## Three Ways to Think about the Cost of Capital

Before we start understanding the terms of the cost of capital, we need to define a little bit of notation. so, where are we going with this? What is WACC? First, as…

## What is the Cost of Capital?

What is the Cost of Capital? We are talking about the interaction between, corporations and investors in the market, and they need to interact in a market, because investors are the ones…

## Diversification of portfolio

Diversification of portfolio What is a diversified portfolio? What I have learnt is that when I get to gain the most by diversifying, is when the correlation of the assets that…

## What is Diversification?

What is Diversification? The goal of diversification - the ultimate goal of diversification is to maximize, to get the highest possible risk-adjusted returns. Point number two Point number two sort of follows…

## Diversification and Correlation

Relationship between Diversification and Correlation All right, now that brings you straight into the age of diversification. We cannot really separate diversification from co-relation. At the heart of diversification is the co-relation. You cannot…

## Correlation Matrix

Correlation Matrix Now let's take a look at this correlation matrix. A correlation matrix is simply a collection of, of correlations. And some of those numbers may not be large enough for…

## Portfolio Correlation coefficient

Portfolio Correlation coefficient You can never have a proper portfolio. You can never build a proper portfolio if you ignore the idea of correlation. Because whether and to which degree. Assets move in…

## Portfolio Risk

Portfolio Risk What is Portfolio Risk? There you have ten years, three assets and let's think of those as annual returns. It does not matter whether these are Dollar returns or Euro returns,…

## How do we calculate beta?

What is beta? How do we calculate beta? Beta is not only a very widely used measure of risk but also, it's the central magnitude in what we call the capital…

## What is Risk or Volatility?

What is Risk or Volatility? So, in order to now move on a little bit, we're going to think in terms of return. We're going to focus for the next few…

## Arithmetic and Geometric Mean Returns

Arithmetic and Geometric Mean Returns Now, there is more than one way of both assessing mean returns and assessing risk and we're going to look at two definitions on each…