Month: March 2021

Mergers and acquisitions – The terms explained   Terminology   The term ‘merger’ is usually used to describe the joining together of two or more entities.   Strictly, if one entity acquires a majority shareholding in another, the second is Read More …

Introduction   Firms are exposed to interest rate movements in two ways:   The cost of existing borrowings (or the yield on deposits) may be linked to interest rates in the economy. This risk exposure can be eliminated by using Read More …

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 …