If debt is cheaper than equity why do companies approach the equity market?
Question:
Answer:
Equity is always cheaper and better than the debt.
Thats why companies are after equity.
In a debt, you necessarily hold to pay interest every year at contracted rate, whether you incur profit or not.
A debt carry the burden of repayment on maturity and the risk on debt may take place any time, if business sees downturns.
High leverage is not right for any organization.
In shield of insolvency, the debt will have to be rewarded if secured, to the extent of realizable value of the surety.
Debt will get priority over the equity contained by the event of insolvency.
However, in the casing of equity you are under no such obligation.
Equity represents owners. having more equity add to company's financial strength.
No fixed rate for payment of dividend. No risk of repayment
Dividend is payable singular if profit is made, then again just when decided by the Board. Plough put money on is possible.
In the case of insolvency, the stake of equity holders comes as ultimate.
In distress, it can even be decided to use up the extent of liability under equity thru sub-division or consolidation.
When within is excess profit, bonus shares can be issued or dividend can be paid.
.
Equity will afford you more flexibility. If the company isn't doing well, they are not obligated to foot dividends. With debt, the payments are mandatory and fixed, so limited brass flow could be more of a problem with debt.
What you're really asking here is in the region of WACC. G00GLE that if you don't know what that means...Now, to answer your examine...
Companies need (actually, prefer might be a better word) to approach the equity marketplace first. Doing so, gets them on the radar eyeshade...which gives them better and cheaper access to debt equity. When the company is gushing profits adjectives over, they can reduce their profits by borrowing money and paying interest expense - which reduce taxable income. Then, they take the proceeds from the debt to buy hindmost stock, which jacks up the stock prices, lowers WACC, and gets a better return for the shareholders.
U r grill has the answer yaar. Just devise Debt is a liability to a company and in some or other forms they must be repaid. But Equity is resembling a short term liability. After few years or more as per agreement , it will be converted into shares. a Debt holder is other a Debt holder , but an Equity holder is a share holder after few years and so Equity will be a liability for few years and then following it will become as assets. This is the main basis that companies afford more for Equities than Debts.
Debt is not cheaper than equity.
Not all companies can get hold of debt financing. Most of the time creditors will require some sort of collateral, which companies can't always post.
You tend to see the effects of this if you look at financing structures across industries. Biotechs enjoy little in the path of tangible assets, which mechanism no collateral. They therefore rely on equity financing. Airlines, otherwise, have billions within tangible assets, so it make sense for them to go beside the cheaper debt option. Note, however, that airlines anyone financed with debt make them much more sensitive to economic cycles because they must brand payments on their debt.
This is just one contrasting example, if you do some digging you will find more. The broad rule is that debt financing is for companies with soaring levels of palpable assets, and equity financing is for riskier enterprises which habitually have few concrete assets - investors are much more willing to assume risk than bank.
Hope this helps.
You can incline capital at a premium base on the credentials of your company besides utilising the vibrancy of the capital souk to promote your company as a wider investor company is exposed to your company.
When you raise debt, the investor is expectant of a fixed guaranteed return and the investors are usually huge investors and smaller in number.
how do you merit an asset?
Question:
Answer:
Assets are if two types, Capital Assets and Assets that are fungiable like Gold.
Capital Assets are valued using the CAPM or Capital Asset Pricing Model. It can also valued using the Discounted Cash flow model whose discount rate can be found out using the above CAPM or can use ROI, cost of income or opportunity cost rate meaning subjective rates.
Fungiable Assets are priced base on the demand and supply of the asset.
It depends. [That is the standard answer adjectives CPAs are advised to grant until they have the details.]
Are you determining a valuation for rates purposes, for financial statements, or for buying/selling an asset?
Somebody have some experience beside Ameritrade?
Question:
Can you tell me something in the order of it, please
Answer:
I have have an Ameritrade account for over 5 years. In my judgment,
1) The Positives:
Trades are a flat $9.99, and unlike some other discount brokerages, there are no non-activity fees, or minimum balance (as far as I know). The website is relatively clean and comfortable to use, and trades are executed quite promptly.
2) The Negatives:
Sometimes due to weighty traffic, logging in and navigate the trading website can be a little slow. This doesn't transpire often, but it does transpire enough that I interest. The stock research reports they provide are not very extensive (Argus, S&P, Goldman Sachs are the basic ones). Better than Scottrade ($7 trades), but worse than Fidelity. Customer service on the phone/email can be slow, and usually they are not that helpful (not rude, however). Withdrawing money from your side is a hassle, because you presently can't link withdrawal to your bank. You own to request and receive a check, which you then hold to cash contained by at your bank. Their interest rates for sitting money are also Extremely low, something similar to 1-2%, if that.
I opened a Fidelity report because I value research (apparently #1 for discount brokerages) and Excellent customer service (extremely polite and helpful), which includes phone, email, and IM, which is great. Fidelity is expensive @ 17.99/trade, but if you own 50K, that drops to 10.99. Plus, you can link to your hill accounts.
So if you have 50K or trade enormously rarely, I recommend Fidelity. If not, Ameritrade or Scottrade is better, but don't expect perfection. I wouldn't consider ETrade, because even though they own convenient linking of bank/stock accounts, I hear they are extremely poor in customer service, and hold a lot of fees/charges.
It is great. They are highly afordable and they provide a lot of tools that support you research stocks...
It's one of the Largest Banks in the World.
It's particularly easy and surrounded by expensive to do it all on procession.
How do qualitive factor resembling the condition of an asset impact a final lease or buy judgment?
Question:
Answer:
If the asset purchased by lease carry some expediency like square value or reconditioning meaning which is substantial in amount, consequently it can form a margin for replacement of the imaginative asset. Depending on the resale value of the existing asset, one can resolve when to replace the exissting asset by going for a new one through lease or direct puchase, taking into the interest rate and spell of repayment offered by the financial institution or banker.
if the condition is doomed to failure it will decrease the selling price
Do quibble funds measure the open market or is it in recent times marketing?
Question:
Friends in investment bank tell me you cannot overwhelm the risk adjusted flea market, along the random hike lines. Either:
1) Hedge funds create so many portfolios that a few of them work by karma and these are the ones they promote in the following years leaflets, i.e. pure marketing whereby they take rich on comissions
2) They actually hold strategies that work but are so top secret that we may not hear around them for another 5 years, by which time it no longer works.
Does anyone know the answer?
Answer:
I have just now been studying this nouns for my dissertation at university and to really sum it all up it would give the impression of being that
- Hedge funds are capable of hitting the market, but the probability of a fund consistently beating the souk year after year is slim.
- As many funds defeat the market in attendance are usually equal numbers that don't.
- As soon as a successful trading strategy is discovered and published it appears to disappear as the market seek to use the new strategy.
- To acquire greater return you must take greater risk, sometimes it pays rotten and sometimes it doesn't.
- A well thought out buy and hold strategy appears to almost other be the best strategy in the long residence. Many of the short-term strategies may appear to outperform until trading costs are added.
- It is suggested that some hedge fund manager often buy massive amounts of what the fund provider’s regard as 'safe' stocks if they are also buying risky stocks so that if the fund underneath performs they hold some defence against their own behaviour.
The whole argument is a huge nouns, with loads and masses of papers written on and around the subject. Eugene Fama is credited beside stimulating much of the debate back within 1965 when he first proposed 'Efficient Markets Theory', and later within 1970 the 'Efficient Market Hypothesis' in its many forms.
If you have an interest surrounded by the area, consequently seeking out these articles and replies to them by other authors is a good starting point. Also check out literature on Event Studies, Behavioural Finance etc.
You will soon see that your sound out is one that doesn't appear to have a heavy answer to all relations!!
they can but they do not always, the enjoy much higher risk and are you really sure what your investing within, better get some details first.. P.S., i used to work for a dither fund manager,.. never will i invest within one unless i manage it myself..
The problem is that most quibble fund managers use similar criteria when making investment decision.
This being the valise, in doesn`t matter what market sector, the decree to go long or short will encompass most of the quibble funds involved in that sector to follow suit.
If they seize it wrong and/or risk too high a proportion of their funds, the resultant fall-out surrounded by prices can be dramatic. As the commissions are so high and the manager so well compensated, at the end of the daytime, the hedge fund investor can be taking a greater risk than those following the usual investment walkway in the stock marketplace and mutual funds.
There are sucessful hedge fund manager that buck the trend, but over time they are as likely to underperform as do so oodles of their counterparts in mutual funds.
Hedge funds own enjoyed the relative sucess of the bull market in stocks and commodities for the finishing few years. It remains to be seen how tons can cope with the volatility that can presently be expected.
It remains to be seen within the coming recession how big the fall-out is. This will then increase the prominence on marketing and commissions amongst those who stay in business.
Hedge funds is freshly another investment tools in the marketplace for people who preference to earn money. Hedgy funds beat the bazaar as they uses financial instruments and assets classes. It can get TRUE returns on any market conditions. Hedgy fund is specialized or concentrated and use leverage. Their strategies are usually event driven, fixed artribage, intercontinental marco.
Most hedge funds require you to enjoy over $1,000,000. Some require 5M or 10M! But they usually won't beat the souk. They do perform resourcefully (some of them) when the market is going down. But usually the flea market goes up.
There are mutual funds that hold beaten the flea market over extended periods of time. There are even funds that time the market, and whip less risk than the flea market.
Yes.
According to the Guiness World of Records.
The highest salaried employees are Hedge Fund Managers.
Where is a apposite place to put a stop proclaim for a stock?
Question:
at what price/percentage should I put a stop order on a stock. For example should i put the stop command at a 2 percent loss or 5 percent. Also should I use a trialing stop instead of a plain stop.
thanks
Answer:
A trailing stop make sense when things are marching upward--I can't communicate you how much money I lost learning that when giving spinal column my profits when the cycle turned and I missed it. The real trick to the percentage is figuring the volatility. Look at UNP, for instance. A stop loss that be too small would have you constantly kicked out the bustle. So look at your stocks of interest as if you were trying to guess a girl's period. It swings up and abruptly swings down and as long as the girl is interesting, keep under surveillance the falls and say and ask yourself, "Am I going to grasp lucky?" Then jump surrounded by and ride her up, ready to capture off when she change her mind again.
Answer is very dependent on a bunch of variables, approaching the Beta of the stock in give somebody the third degree, normal trading array, news coverage of the sector and the demanding industry. A trailing stop is similar, you are really just 'moving the table' a bit. I just use stops when I am not able to monitor my positions actively, and next only if I am dealing near a stock I am already wary of.
Sorry but your interview can't be properly answered by anyone but you. Your trading personality can't be read or buried by anyone else!
Good luck and Good Fortunes in the market!
Using a fixed % can sometimes stop you out during normal swings. Another concept is to identify support and resistance and place your stops somewhat below support on a long trade and somewhat above resistance on a short trade. I've splashed up a chart with support and resistance as an example: http://stockcharts.com/h-sc/ui?s=actl&p=...
Price movement will tend to stall around support/resistance and after consolidating a bit will any bounce off the support/resistance or break through. You want to not attain stopped out if it bounces but you do want to get stopped out if it breaks through. A checklist you could walk through is as follows:
1. Determine the maximum % loss you are willing to pinch
2. Determine the support levels (for a long) and the resistance level (for a short).
3. If on a long, a support level falls inside your loss tolerance with a outside edge (1% more or some number you feel comfortable) later you can make the trade. If no support height is within your max lost %, afterwards you should not trade the stock until that criteria is met.
So on the chart I've linked to, let's read aloud that on Feb 13th, the stock is at 16.00 and you want to buy. You have a max loss confine of 3% which is 48 cents. You would place your stop at 15.52 IF it falls outside a support. The closest supprot is at 15.50 so you would not make the trade. But if your max loss mark out was 5% which would be 80 cents, your stop would be at 15.20 which is outside the support stratum, with tolerance and it's ok to trade name the trade. In this example, I would put my stop at 15.25. On the 22nd when the price broke through resistance at 16.80, I would move the stop to below the support at 16.25 - probably at about 16.10. As price climbs, preserve moving your stop to just below a trailing support price.
Stockcharts.com have a chart school (free) so you might budge learn give or take a few how to determine support/resistance: http://stockcharts.com/school/doku.php?i...
What is the relationship between interest rates and bond prices?
Question:
Answer:
Bonds are bought and sold in a financial souk for 2 reasons
1. for long permanent status investment
2. shot term gain
The interst rates and bond prices are inversely related.
Retrun on a bond, if fixed, will have a guaranteed return.
The YTM of bond is arrived at by taking into story the current price and the discounted retrun over the residual maturity.
If the interest rates slump, then any investment as on date will bring lesser return than a bond and vice versa.
Thats why, the bond prices rise, when ther is crash in the int. rates.
But the extetn up to which the price will rise, will depend upon to the extent the ytm remains more than the give up based on the current interest rate.
However, contained by the case of floating rate bonds, the situation will be totlaly different.
.
Inverse, if interest rates jump up then bond prices will stir down. If interest rates go down consequently bond prices will go up.
i agree -inverse
As interest rates rise bond prices topple and as rates fall the prices of bonds increase. Inverse relationship
Who can backing me how to start an online stock trade ?
Question:
Answer:
http://www.investopedia.com
It's awesome, full of tutorials, articles, and it even has a virtual trading simulator base off of the true bazaar prices. Good Luck!
i use scottrade to trade stocks. its one of the best companies to use out there.
Hi, i suggest a great site near plenty of Issues related to your Investing and everything around it. it also provide clear and accurate answer to many adjectives questions.
http://investing.sitesled.com/
I am sure that you can go and get your answers in this website.
Good Luck and Best Wishes!
Don't trade - invest. Open acct at schwab.com or somewhere. Nothing to know or figure out. Either enjoy the $$ or not - only issue. ADX EWA PEO EFA SNH IAU - adjectives options
Scottrade.
Plenty of pious advice here.
Is here any program or site that shows the stock marketplace? Like a scrolling stock quote?
Question:
If it's free, then great.
Answer:
If you're looking for a ticker, turn on your tv to cnbc or fnn. If you're looking for streaming quotes, afterwards read on.
There's LOTS of sites that show streaming quotes. Start w/ your broker!
Outside of that, you could use yahoo finance or stockchart.com, or bigcharts.com, or something resembling that.
I use prophet.net and it's fantastic.
Hope that help!
Try www.CNBC.com.
http://www.premiuminvestor.com/...
www.cnbc.com does and it is free
Go to Yahoo Finance!
What are some well brought-up cheap online discount brokers contained by India?
Question:
Answer:
http://www.sharekhan.com
icici & geojit
I have found Reliance Money to be the cheapest.
http://www.reliancemoney.com
They charge me Rs. 2500 per year flat, for upto 60 lakhs of abdication trades. If I do intra day trading, I return with upto 6 crores of value. I merely end up paying STT (0.125% respectively way for delivery) and stamp duty + transaction import tax (about 0.0015%).
Even Futures and Options are cheap - a flat brokerage of Rs. 12 per trade is charged (regardless of the size of the trade)
I average about 15 lakhs of trade per year, including buying and selling. My current brokerage (sharekhan) costs me more than 7500 Rs. (at 0.5% respectively way plus 12.24% service excise on the brokerage itself).
if you are rich what will you do beside your money?
Question:
Answer:
I would go to mixed apartment complexes and rent apartments. Then I would go to the homeless shelter and ask them to refer me to those who just call for a bit of a hand up, and I would hand over those people the apartments rent free, and also support them find jobs. Once they own a job, they could retribution me some money, about a third of their income, probably not adequate to cover the apartment fully. I'd set aside some of the money, and when they were set to be out on their own, I'd give it stern to them. Then I'd keep repeating the cycle.
If I have a lot of money I'd do like peas in a pod thing but own the apartments.
provide my family of 8 a nice life-size home to live in, give a hand all my 6 children a college lessons, buy a nice tombstone for my deceased stepson, back all my instantaneous family member financially, and build a community center where kids from disfunctional family or of poverty can go be out of danger and have fun and devour healthy, surrounded by my community
Build a Church.
Build a Hospital.
Buy several Shrimp Boats.
Invest in Apple.
I wanna know which one is better ELSS OR ULIP ??ot its better to budge for MF?i m already have one ULIP venture?
Question:
Pls tell me wat is ULIP ? WHAT IS ELSS ? Which one is gud to invest and also pls suggest me which scheme are best to invest in ULIP or ELSS ,
Answer:
Beside Tax Ben. ULIP and ELSS have nothin in similar. But if you compare the charges of both the initial charges are more contained by ULIP in compare to ELSS but Fund Management Chaeges are slightly at superior end within ELSS so if you want to invest for short time then progress for ELSS and go for ULIP if u wanna invest more later 8-10 years.
Ulip is a scheme which provides for insurance and also invests contained by stocks to maximise the returns. ELSS is a scheme which provides for income charge rebate and invests in stocks. If you require insurance, budge for pure term insurance which is cheapest. ELSS besides giving rates benefit gives better returns and lock surrounded by is three years.
all r equally right bad
it depends on ur aspiration risk amt period etc
correspondence in detail
if u hold some time
trade in commodity index adjectives 4 more return
get info something like it
more on my blog
If you know something about investing, afterwards STAY AWAY FROM ULIP.
Go for a mutual fund. It will save you lots of expenses that are masked. And, all the commissions you will liberate, will allow you to buy many other things.
Good luck.
KKP
How do you find out if someone owns a corporation?
Question:
Answer:
If it's a publicly listed company on the National Stock Exchange (NSE), do this: Go to www.nseindia.com and search out for the company. When you find it the page shown will contain stock prices and such. There is a link for "shareholding pattern".
Click it and navigate to the most up-to-date submitted shareholding pattern. In in attendance you can see links for "Promoters" - clicking that will give you the name of the individuals or corporate holdings of the promoters.
when you get due twice as a share holder. Or as a share holder you own part of the corporation. The direction work for your money. And you work for your money that you invested.
Investment Question?
Question:
I’m just throwing out the feeler as I have no money to invest at this time. I’m a moment ago curious. How much money would I need to invest, and into what type of picture, to receive $1,500.00 per month in interest income? Basically to reward my mortgage for me.
Answer:
It depends on what you invest the money into. Low grade or Junk Corporate bonds (assuming they don't default) relinquish between 9 and 15% right now, but they are risky.
Stocks next to dividends seem to be a trend, but I wouldn't look at most of the S&P stocks for dividends. The S&P dividend percentage is with the sole purpose 1.8%.
If you stuck the whole article in CDs at articulate 5%, one million dollars will only hand over you $50,000 per year pre-tax, after tax (depending on your duty bracket, say contained by this case 27%), you're not here with $36,500, or roughly $3000/month. Half would travel to the mortgage, but lots of people cannot live on $1500/month next to car payments, house taxes, and the other things you call for to have.
I would do a mix of CDs next to of rate of at least 5% (or a Money Market Fund at 5% or higher) if you have $1,000,000. If less, you stipulation to get into corporate bonds near lower grade ratings or into Muni Bonds (but check the levy ramifications on those). Stocks unanimously don't pay accurate dividends as a whole, but you would own to research which stocks have well-mannered dividends and then see whether or not they are worth buying to carry the dividends.
MIRA QUE INTERESANTE TE FELICITO, SALUDOS...
You'd need give or take a few $300k in a dividend paying stock. Collect the dividend and write covered call on the stock. That will give you the money you involve.
$80,000.00 USD in a Wells Fargo Account.
There are some stocks that repay 10% annually in dividends. The price of stocks can other go up or down depending or the open market and the economy. If a stock didn't evolution in price, and remunerated 10% annually, you would need $180,000.
A couple of stocks near big dividends:
Fording (FDG), Primewest (PWI), Precision Drilling (PDS)
Nothing in the bazaar is guaranteed though. If you are interested in research about the flea market, then next to a lot of research and complex work you can find good investments that will trademark you 10% a year or more. I recommend studying what the best investors are buying and selling. You can find this information at http://www.top10traders.com - this is a free site that lets you create a portfolio of stocks near $100,000 in "play" money. Each daytime the site ranks the best performing portfolios, so you can see how your picks perform compared to other investors. You can also read posts on investing from the best traders, as okay as share your own investing ideas. There is also a charting part , so you can see how your portfolio performs compared to the S&P 500.
Here are this month's best traders:
http://www.top10traders.com/top10standin...
Hope this help.
Learn stock trading in haste and smooth?
Question:
Answer:
You can’t. However, there are things you can do!
Your ask reminded me of something I recently read. Let me start by quoting John Carter,
"Trading is the most illusive profession in the world. Do you know anyone who have recently walk into an airport, jumped into the cockpit of a jumbo jetloaded near passengers, and taken rotten down the runway without any prior training? Yet culture will routinely open an information and start trading witout any guidance whatsoever. And that is equally insane."
You can unquestionably trade and lose as much as you want, but I wouldn't recommend it.
Use your time to continue to swot. Buy "How to make money surrounded by stocks in devout times and bad" by William O'Neill. And read it for the basics.
You might start near a firm like investools.com or one of the other artistic firms. They can really help you protect your money and give support to it grow.
If you need to put the money somewhere for immediately. Perhaps you can buy a couple of ETFs (similar to indexes) like the QQQQ's (Nasdaq) or DIA (Diamonds = DOW). That approach you'd at least be mirroring the flea market. That'll neutralize you in the certainty that at least you'd be performing as capably as the market to start.
And THAT should buy you plenty time to better learn how to take home money!
Let me know if you have any question.
Go to www.investors.com. Click on the "How To Invest" link. Read the easy-to-follow module on reading stock charts, buying at the proper time and selling at the proper time. Good luck!
There is a really good tutorial set on zacks.com. Don't win sucked into they hype about their premium services, but if you obtain some of their newsletters they have some wearing clothes leads sometimes and you can practice on their portfolio or Challenge links.
NO!!
From a retired, but still involved broker of 30 years. There is no magic contained by trading stocks, and a ton of mystery. The only bearing to learn the market is over time, and study, just resembling most things. There are some good 'tools' to assist you. But do not stir out and buy into a 'program' or software that promises easy and sure profits, those don't exist.
Even the best programs will lone help a up to date investor/trader. And only to the extent of their own capability.
Don't and you can't.
There is no fast and comfortable way. Period.
To even to open to understand stocks you involve at least a MS within Finance...or an MSAE specializing in Financial Econometrics.
So thats 6 years of college, 4 getting your BS contained by Finance and then two more getting your MS. CFA is flexible but the salary kick is worth it after a few years.
It's difficult to learn how to trade stocks swiftly & easily (it can purloin a couple of months to grasp the basics), but the closest you'll get is the excellent Investing portion on Fool.com http://www.fool.com/investing.htm...
One good means of access to train on actual data is tradertrainer.com. This site let you trade on a 120 day run for a stock after ranks you against the other people who hold done that run.