Weekly Finance Term – CW 3

  The IRR Rule – Internal Rate of Return   The underlying principle is the internal rate of return. This rate measures the profitability of potential investments and, therefore, is a good guide for decision-making.   Computing the internal rate of return   The internal rate of the discounted rate. The first step of the … Continued

Weekly Finance Term – CW 2

Nostro Account   The term “nostro account” describes the situation in which a bank holds a foreign currency account in another bank. Nostro descends from the latin word for “ours” and is used to name a situation in which to bank institutions are sharing an account. The opposite is “vostro account”, describing how a bank refers … Continued

Weekly Finance Term – CW 51

Clearing The process of clearing is reconciling purchases and sales of various futures, options, securities, and other trades from one company (usually a financial institution) to the other. The companies executing those transactions are called clearing houses. Those clearing houses function as an intermediary for buying and selling transactions. They act as counterpart for both, … Continued

Weekly Finance Term – CW 50

Interest Rate Swap Generally there are two ways of paying interest. The first is to have a fixed percentage rate which is due at a specific date in time. The second way is to have flexible amount of interest, due at some date in the future. In the first case the amount payable is fixed … Continued

Weekly Finance Term – CW 49

Preference Share In general there are two types of shares: 1. the preference share and 2. the ordinary share.   Preference or preferred shares grant the shareholder certain extra rights which shareholders owning ordinary stock do not have. Holders of preference shares are paid first when the company pays dividends. Moreover the preferred shares, in most cases, come at … Continued

Weekly Finance Term – CW48

Explaining Buy Limit Order A buy limit order is an order to buy a security (such as stock) at a specific price, the so called limit price. Meaning if in the future, the market price drops at or below the chosen price, the order is executed and the stock is yours. If the price does … Continued