Investors need to weigh in various factors when evaluating private companies. These may include the company’s book value, its profits, its cash flows, etc. Usually, public companies are easier to evaluate since most of the information is available through the stock market. However, the same does not apply to private …

Lenders assess various factors when providing a loan to a borrower. These factors may include the borrower’s credit ratings, history, security offered, etc. Based on this evaluation, lenders decide on whether to provide the loan or not. It also helps lenders measure the return they want to get from the …

Inflation is the decline in the purchasing power of a given currency over a specific time. Usually, it represents the rate at which the price level of a basket of selected goods and services in an economy increase. The selection of this basket will depend on the index which measures …

For investors, investing in various assets or income streams presents several risks. These risks can be specific to the asset class or the market that investors enter. Some risks may apply to all investments regardless of the type of asset or market. One of these risks includes inflationary risk associated …

Every investment comes with risks, which also dictate the returns that investors can expect on it. Usually, investors expect to earn returns that exceed the income they will get for zero-risk investments. For that purpose, they can use the risk-free rate. This rate also adjusts for any inflation changes in …

What is an Endowment Fund? An endowment fund represents a restricted financial asset. Endowment funds are common among nonprofit organizations. These contain capital investments and any income leveraged by the nonprofit organization to fund the overall mission. For endowment funds, nonprofit organizations can only use the earnings made through them. …

A fund represents a pool of money collected by investors that aims to meet a particular purpose. There are various types of funds that have specific goals. Based on these goals, investors can select a fund and invest in it. Usually, investors also appoint an investment fund manager responsible for …

Most companies offer their employees pension plans which allow those employees to earn after retirement. These companies manage any contributions through investments. The employer invests these amounts on the employee’s behalf. These earnings then generate income, which funds future pension payments to employees. Companies may also hire an investment committee …

Pension or retirement plans are typical for employees working in companies. Through these plans, they can ensure they receive income after retirement. There are several retirement plans where they, their employer, or both contribute an amount. Some plans offer a fixed contribution upon retirement. However, some others come with uncertain …

When it comes to retirement plans, individuals have many options. For employees, there are some employer-sponsored plans to which they can contribute. Usually, these include defined benefit and defined contribution plans. These are two different retirement plans according to their composition, returns, and management. Before understanding the differences between these, …