The equity capitalization rate (ECR) is the capitalization rate that shows the relation between the income from the property in comparison to the equity of the investor. ECR is an important metric as it measures the real cash return at the time of acquisition, i.e., the investor’s money.Usually, the investor’s ... Read More

The PE ratio is the present price of the stock divided by the expressed earning per share of the stock. The PE of a stock is a subject to regular change. As the future retained earnings of a company are often found in the price of a stock, the PE ... Read More

Investors can be categorized into several types based on their risk preferences. Risk preference is the intention of investors of taking risks. Usually, higher returns are associated with higher risk-taking capability, while lower risks yield lower returns. Risk-averse and risk-neutral investors are categories that divide investors into two types, considering ... Read More

In a supernormal growth phase, the stock price increases at a rapid pace. The period in which such anomaly occurs lasts beyond a year. After the supernormal growth, the share shows general properties and grows at a normal rate. Super annual growth is a common phenomenon, provided there is demand ... Read More

What is Variance?Variance is a metric that is needed to estimate the squared deviation of any random variable from the mean value. In the portfolio theory, the variance of return is called the measure of risk inherent in a singular or in an asset of portfolios.In general, the higher the ... Read More

The present value (PV) of a stock with zero growth is derived by dividing dividends distributed per period by the required return in that certain period. The formula is not an exact or guaranteed approach for evaluating a stock’s value but is more of a theoretical approach.The PV of a ... Read More

An investment’s “expected return” is the total money one can expect to lose or gain on an investment with a foreseeable rate of return. Basically, it lets one know whether the investment would be profitable providing enough money or it will be a loss, costing the investors’ money. By extension, ... Read More

Ordinary shares, also known as common shares, are used to raise capital for businesses. They are equity stocks that provide voting rights to the shareholders. Usually, dividends on ordinary shares are distributed according to the discretion of the management of the company that issues these shares. The dividends are distributed ... Read More

Not Cash EarningsThe biggest and, by far, the most prominent disadvantage of the P/E ratio is that the earnings it shows are the accounting earnings. These earnings are defined by the accounting standards of specific standards for a particular country. The earnings are not the cash earnings of the firm. ... Read More

Standard Deviation (SD) is a technique of statistics that represents the risk or volatility in investment. It gives a fair picture of the fund's return. It tells how much data can deviate from the historical mean return of the investment.The higher the Standard Deviation, the higher will be the ups ... Read More