The third index that we will look at is the NASDAQ Composite Index. Unlike the other indices that we have reviewed (S&P 500 and Dow Jones Industrial Average), the NASDAQ Composite consists only of stocks that trade on the NASDAQ. A brief review of the NASDAQ exchange is thus a good place to start. Brief […]
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Call me old-fashioned, but I believe that words matter. In the world of finance, the terms investment and speculation are often blurred. We frequently use “investment” as a catch-all to describe any outlay of money made in the hope of future profit. I’m as guilty as anyone of using it in this overly broad sense.
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The time value of money is a concept in finance that states that money received in the future is worth less than money received in the present. The difference in value between current and future money is due to the interest that could be earned on the present amount. In other words, the discount between
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Introduction Accounting is a function in which business transactions are recorded and presented in the form of financial statements. The three main financial statements are the balance sheet, the profit and loss statement, and the cash flow statement. Accounting transactions must be recorded in accordance with a set of rules. In the United States, the
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Introduction When an individual or group of individuals decides to start a business, they must decide on what type of organization they will do business as. This decision should not be taken lightly and should be made with the assistance of a business attorney and CPA. In the United States, there are four basic types
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Introduction In the previous post, we covered the time value of money (TVM) concept. In this post, we will look at how the TVM concept can be used to make financial decisions. Discount Rate When we discount a future sum or cash flow stream, we must choose a rate which compensates us for the riskiness
Introduction All investment decisions involve trading a current sum of money for an expected future sum. The time value of money (TVM) is a core concept in finance that recognizes that money in the future is worth less than money in the present. The key concept underlying TVM is the concept of opportunity cost. This
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