Untitled Flashcards Set

Things to remember

What is cost of credit?  The cost of credit refers to the price you pay for borrowing money. It's essentially the interest and fees associated with using credit, such as loans, credit cards, or lines of credit.

What is repayment terms?  Repayment terms are the specific conditions and guidelines under which a borrower agrees to repay a loan or debt. 

What is Unsecured source of funds?   n unsecured source of funds refers to money that is not backed by any collateral, meaning the lender has no specific asset to claim if the borrower defaults on the loan. This type of financing relies solely on the borrower's creditworthiness, making it riskier for lenders.

What is Serial Bond?   Serial bonds are structured with staggered maturity dates, meaning each segment of the bond issue has a different maturity date. The terms of the repayment schedule, including the maturity dates and interest rates, are clearly outlined in the offering prospectus

What is Convertible Bonds?   They are essentially bonds that can be converted into a predetermined number of shares of common stock in the issuing company at a specific price and time. This flexibility makes them attractive to both investors and companies for various reasons.

What is Cash equivalent?   Cash equivalents are a crucial aspect of financial accounting and corporate finance, representing highly liquid assets that can be readily converted into cash within a short timeframe.

What is a Nominal rate?   he nominal rate is the basic interest rate that a lender advertises or a borrower pays. 

What is Savings?    Savings are a fundamental aspect of personal finance, representing the money you set aside from your income for future use.

What is Preferred Share?   Preferred shares, also known as preferred stock, represent a unique type of security that combines characteristics of both common stock and bonds.

What is income?   At its core, income refers to the money, property, or other transfers of value received over a set period of time in exchange for services or products. It represents the ability to consume and save, reflecting an individual's or entity's financial well-being12345.

What is Common Shares?    Common shares are a type of security that represents ownership in a corporation. They represent a fractional claim on the company's assets and earnings. 

What is Effective Interest Rate?  The EIR differs from the nominal interest rate, which is the stated interest rate on a loan or investment. The nominal rate doesn't account for the impact of compounding, which is the process of earning interest on previously earned interest. As a result, the EIR is always higher than the nominal rate unless the compounding frequency is annual3.

· What is Investment?  Investment is a commitment of resources, typically money, with the expectation of future benefits.

· The goal of investment is to generate income, increase value, or both.

· Investment involves risk, as there is no guarantee of future returns.

What is Present Value?   Present Value (PV): The current worth of a future sum of money or stream of cash flows, discounted at a specific rate of return.

What is Inflation Premium?   The inflation premium is a crucial concept in finance, representing the additional return investors demand to compensate for the risk of inflation eroding the purchasing power of their investments. In essence, it's the extra interest rate lenders charge or investors expect to earn to offset the expected decline in the value of money due to inflation12345

What is Mutual Funds?   A mutual fund is a company that invests in a variety of securities, such as stocks, bonds, and short-term debt. Investors buy shares in mutual funds, with each share representing a portion of ownership in the fund and its generated income.

What is Accumulation Phase?    The accumulation phase is a crucial period in an individual's financial journey, particularly when planning for retirement. It represents the time when individuals actively work towards building wealth and accumulating assets to secure their financial future12345.

What is Accrued expenses?   Accrued expenses, also known as accrued liabilities, represent a crucial aspect of accrual accounting, a method that aims to provide a more accurate picture of a company's financial health.

In a banker Rule How many days to be computed in a month?

What is gifting phase?  The gifting phase is characterized by a shift in financial priorities. While most investors focus on minimizing income taxes during their accumulation years, the gifting phase prioritizes minimizing estate taxes and burdens on heirs.

What are the sample of a fixed assets?   Fixed assets are tangible (physical) items or property that a company purchases and uses for the production of its goods and services. They are considered long-term assets, meaning they have a useful life of more than one year. Fixed assets are typically classified as property, plant, and equipment (PP&E) on a company's balance sheet