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What is Market capitalisation? If you want to know how much a firm is worth according to the stock exchange, then you need market capitalisation = the total market value of all outstanding shares. The importance of a market cap is that it clearly shows the size of a company. It is the very first factor that investors pay attention to. It identifies various characteristics, including risks. For example, Perry the Platypus LLC issues 30…

Investment management fees You are an investor, Harry! But if you doubt your ability to invest, then you can always turn to Dumbledore or the specialist who will control assets on your behalf, but you will have to pay the investment management fee. In most cases, typical fees for investment management are based on a percentage of assets under management (AUM). In general, you pay for portfolio management, consulting, and various administrative expenses. You name…

What’s an investment? When one wants to generate income or preserve capital, they invest money. Here’s a simple example of financial investment: your friend opened a profitable business. You give him let’s say £1,000 and become a part of his company. If profitable, you may be entitled to a dividend payment as a result of becoming a shareholder of his company. If the business grows, you could get more money. Investments can be financial (when…

Let’s start with the most important things: Foreign currency markets work day and night and their participants are banks, corporations, central banks, investment management firms, hedge funds, retail forex brokers, investors.The international foreign exchange market facilitates global transactions, namely loans, investments, and global trade in goods and services.Please note that the currency market is not one organisation, but a network of global markets that are located in different time zones, and therefore they don’t work…

Portfolio diversification benefits Now you will find out about one of the most popular investment strategies – diversification. Diversification helps you to properly allocate investments and not focus on any one type of assets, thus the volatility of your portfolio gradually decreases. It is one of the methods of risk management. Investment diversification is one of the ways to maintain a balance between risk and reward in your investment portfolio. And for this, you just…

What is a derivative? Derivatives are interesting financial instruments. They are actually a kind of contract or agreement that helps two parties enter into a transaction for the right or obligation in relation to some asset. For example, one party has to sell something and another party has to buy it. These financial instruments are cool because they reduce uncertainty. If you were offered one superpower to choose, and you would choose the ability to…

What is a controlling interest We think you know that when you buy shares, to some extent you become one of the owners of the business, but what does a controlling interest mean? Let’s figure it out! The majority of the voting stocks that a firm gives to a shareholder (or a group of them) have a big influence on all corporate actions. And that is what it’s all about. So if you own at…

Capitalisation of earnings method The term means a capitalisation method of valuation, which helps to estimate investment risks. Imagine, you’ve decided to buy a company but you don’t know whether it is profitable or not, and you need to check the company’s capitalisation of earnings. That’s where the capitalisation of earnings method comes in. It’s worth noting that this method is applicable only to stable companies, which have been on the market for several years…

Whenever you consider investing in a stock, you’ve got to build a case for why that particular one is a good choice. To do so, one must separate the daily short-term noise from the underlying performance. That’s where Fundamental Analysis comes into play. So, what is Fundamental Analysis, exactly? It’s a rigorous examination of all of the factors that could potentially impact the price of an asset. The factors can be of macroeconomic magnitudes, such…

One of the key factors to evaluate when considering investing in a stock is a risk. But how does one determine the level of risk and asset present? It all goes back to fundamental analysis and one of its principal measures — the Stock Beta.  “What is beta for stocks?” — you must be asking. Well, stock beta indicates how much a stock price moves in relation to an index, such as the S&P 500…