## What is EVA?

What is EVA or Economic value added? Well, first, it is a measure of profitability. As a measure of profitability, it is just another way to calculate profits. And so, this is…

## creating or destroying value

Creating or Destroying Value Two managerial mistakes that we tend to see a lot in practice, and, and believe it or not there's actually the both of them have been very widely…

## Corporate Value Creation

CORPORATE VALUE CREATION That as, you may remember, we mentioned in passing before that this is one of those two issues that we were going to address that not, are not only…

## Shortcomings of the IRR

Shortcomings of the IRR Now here is another example. Project B and Project B again you put $100 million today; you expect to get a negative cash flow of 300 million. Excuse me,…

## 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 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 that you have…

## Three Ways to Think about the Cost of Capital

Three ways to think about the Cost of Capital Many people simply refer to terms of the cost of capital as the WACC and the WACC stands for the weighted…

## What is the Cost of Capital?

What is the Cost of Capital? Corporations and investors need to interact in a market because investors are the ones that provide the capital so that the corporations can invest and produce the…

## Diversification of portfolio

Diversification of portfolio What is a diversified portfolio? The lower the correlation between the asset that I bring and the portfolio I already have, the more I stand to gain in…

## What is Diversification?

What is Diversification? Diversification The goal of diversification The ultimate goal of diversification is to maximize, to get the highest possible risk-adjusted returns. When I do diversify a portfolio, would I…

## Diversification and Correlation

Relationship between Diversification and Correlation Diversification At the heart of diversification is the correlation so we cannot really separate diversification from correlation. You cannot again think about the risk of a portfolio, without…

## Correlation Matrix

Correlation Matrix What is Correlation Matrix? A correlation matrix is simply a collection of correlations and some of those numbers may not be large enough for you to see all of…

## Portfolio Correlation coefficient

Correlation Coefficient You can never build a proper portfolio if you ignore the idea of correlation. Because whether and to which degree assets move in sync, or in completely different cycles, is…