Compounding is a process of calculating interesting rates. Unlike simple interest rates where interest rates remain the same over a period, in the case of compound interest, the interest rate goes on increasing with passing time. In the case of compounding, therefore, the wealth grows at a faster rate than ... Read More

Mutual funds are of various nature depending on the needs and requirements of investors. However, the most common factor that separates them is their risk appetite. The riskier firms offer better returns on investment while the less risky ones provide fewer returns.There are predominantly two types of funds: Debt Funds ... Read More

A Capital Market is a place where investors and borrowers deal with each other. So, a finance manager must be aware of the markets. The value of securities and how they're traded in the markets should also be in the knowledge of the manager.Capital markets are where the securities are ... Read More

The conflict between the managers and shareholders of a company is known as the Agency Problem. Agency problems may have a variety of reasons but the most common reason for such a problem to arise is due to the lack of interest in shareholder's wealth maximization.Shareholders usually invest in a ... Read More

The decisions that the management of an organization needs to take regarding the payout of dividends are known as Dividend Decisions. The companies usually want to maximize shareholders' wealth and hence a distribution policy of maximum dividend payout is required. However, if the company pays out all the profits, it ... Read More

In business practices, finance-related functions and management-related functions usually overlap each other. The finance function and the management function go hand-in-hand in most cases. For example, the Operations Managers looking to install a new machine (the Management Function) must get the money which is part of the Finance Function.Usually, the ... Read More

Financial Managers take investment decisions for the well-being of the company. Every company seeks the best outcome from their decisions and hence every company strives to strike the best cord in terms of financial management.However, there are certain natures of investments every manager should be aware of. Finance Managers usually ... Read More

Although Profit and Wealth Maximization sound pretty similar, there are some major differences between them. While profit maximization aims at increasing the profit of a firm, wealth maximization has a larger role to play and it deals with the wellbeing of the stakeholders as a whole.Profit Maximization Vs Wealth MaximizationHere ... Read More

It is not known to all who wish to enter the corporate finance world that three decades ago, the role of a CFO was merely to give financial inputs to the firm. He or she acted more like an accountant than anything else. The duties and responsibilities, therefore, were limited ... Read More

When compounding is applied to an investment for an indefinite period and interests are added to the principal amount + interest on each period, it is called continuous compounding. In such an arrangement interest is added after each period and interest is compounded on the total amount in the next ... Read More