Day: March 28, 2021

Introduction   Types of forex risk   Firms may be exposed to three types of foreign exchange risk:   Transaction risk   The risk of an exchange rate changing between the transaction date and the subsequent settlement date on an Read More …

Risk policy formulation   An important part of the financial manager’s role and responsibility is considering how risk is to be managed.   The control and mitigation of risk costs money and takes up management time, so it is critical Read More …

The principles of option pricing theory     Option terminology An option       The right but not an obligation, to buy or sell a particular good at an exercise price, at or before a specified date.     Read More …

Introduction   Alternatives to the use of existing WACC as a discount rate in project appraisal   We have now established that the existing WACC should only be used as a discount rate for a new investment project if the Read More …

Overview of the WACC   A key consideration in financial management is the firm’s WACC. The WACC is derived by finding a firm’s cost of equity and cost of debt and averaging them according to the market value of each Read More …

Introduction   In the previous chapters we have seen that the dividend decision is one of three key inter-related decisions that must be made by the financial manager (alongside the investment decision and the financing decision).   This chapter covers Read More …