SOURCES OF LONG TERM FINANCE NOTES

Two long-term securities that are available to a company for raising capital are shares and debentures. Shares include ordinary shares and preference shares.* Ordinary shares provide ownership rights to investors. Debentures or bonds provide loan capital to the company, and Read More …

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TIME VALUE OF MONEY NOTES

Most financial decisions, such as the purchase of assets or procurement of funds, affect the firm’s cash flows in different time periods. For example, if a fixed asset is purchased, it will require an immediate cash outlay and will generate Read More …

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PORTFOLIO THEORY AND CAPM NOTES

INTRODUCTION TO PORTFOLIO THEORY A portfolio is a bundle or a combination of individual assets or securities. Portfolio theory provides a normative approach to investors to make decisions to invest their wealth in assets or securities under risk.1 It is Read More …

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CAPITAL BUDGETING TECHNIQUES NOTES

INTRODUCTION An efficient allocation of capital is the most important finance function in the modern times. It involves decisions to commit the firm’s funds to the long-term assets. Capital budgeting or investment decisions are of considerable importance to the firm, Read More …

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RISK ANALYSIS IN CAPITAL BUDGETING NOTES

INTRODUCTION In discussing the capital budgeting techniques, we have so far assumed that the proposed investment projects do not involve any risk. This assumption was made simply to facilitate the understanding of the capital budgeting techniques. In real-world situation, however, Read More …

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