click below
click below
Normal Size Small Size show me how
Exit - Finance
Finance
| Term | Definition |
|---|---|
| Time Value of Money | A dollar today is worth more than a dollar tomorrow. |
| Present Value | Current worth of a future sum discounted at interest rate. |
| Future Value | Amount an investment grows to over time. |
| Annuity | Series of equal payments at regular intervals. |
| Net Present Value (NPV) | Sum of discounted cash inflows − outflows. |
| Internal Rate of Return (IRR) | Discount rate making NPV = 0. |
| Payback Period | Time needed to recover investment cost. |
| WACC | Weighted Average Cost of Capital. |
| CAPM | Model linking expected return to market risk (β). |
| Diversification | Reducing risk by holding varied investments. |
| Systematic Risk | Market-wide risk that cannot be diversified away. |
| Unsystematic Risk | Company-specific risk reduced by diversification. |
| Bond | Debt security with fixed payments and maturity date. |
| Stock | Ownership share in a company. |
| Liquidity | Ease of converting assets into cash. |