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Definitions Of Various Financial Terms

Finance is an aspect that affects a huge percentage of the tings you do in life. Whether you studied finance in college or not, the issue of finance will still affect you. This article explains the meaning of different financial terms that you will come across at some point in life.

The 12b-1 fee is a fee that a mutual fund charges which covers the cost of marketing and distribution and also some service fees.

The 52-week high/low is the other financial term which you should know. This term represents the highest and the lowest closing price the stock trades in over a one year period.

The term asset allocation another one among the many financial terms. Asset allocation is basically an investment strategy for controlling risk and return through adjusting the fraction of every single asset in the distinctive groups of assets.

A back-end load is also among the critical financial terms in the world of finance. If you are an investor and you sell shares in a mutual fund, you get to pay a sales charge that is the back-end load.
You should also be knowledgeable about what a balance sheet is because it is used a lot in finance. A balance sheet is a statement that shows the financial position of a company by accounting for the things which belong to the company, as well as what the company owes shareholders and other stakeholders like creditors.

It is also good that you know what a balanced fund is. This simply refers to a mutual fund type that has both equities and bonds.

You also ought to know what a bear market is. What a bear market refers to is a market that makes a downward trend in its growth by 20 percent or greater over at least two months‘ time frame.

It is also possible that you do not know what a candle stick is in financial terms. A candlestick is in simple terms a technical indicator that helps traders to know the opening and closing stock price for a certain period.

You should also know what cash flow means because it is used very much in finance. cash flow can be either cash in-flow or Cash out-flow. The difference between cash in-flow and cash-outflow is the direction the cash and cash equivalents move.

The other term that is frequently used in finance is the cost of capital. The total money needed to make a capital budgeting project fruitful is what is known as the cost of capital.

The other thing whose meaning you should understand is the cost of equity. Cost of equity, in general, is the total returns expected from particular equity financing a company receives.

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