What is Life Cycle Cost Analysis? Life cycle cost analysis (LCCA) is an approach used to assess the total cost of owning a facility or running a project. LCCA considers all the costs associated with obtaining, owning, and disposing of an investment. Life cycle cost analysis is especially useful where a project comes with multiple…
What is a Savings Account? A savings account is a typical account at a bank or a credit union that allows an individual to deposit, secure, or withdraw money when the need arises. A savings account usually pays some interest on deposits, although the rate is quite low. As of 2019, an average account pays…
What is a Security? A security is a financial instrument, typically any financial asset that can be traded. The nature of what can and can’t be called a security generally depends on the jurisdiction in which the assets are being traded. In the United States, the term broadly covers all traded financial assets and breaks…
What is Risk? In finance, risk is the probability that actual results will differ from expected results. In the Capital Asset Pricing Model (CAPM), risk is defined as the volatility of returns. The concept of “risk and return” is that riskier assets should have higher expected returns to compensate investors for the higher volatility and…
What is an Earnings Call? An earnings call is a conference call (typically held in the form of a teleconference or a webcast) during which the management of a public company announces and discusses the financial results of a company for a quarter or a year. Generally, the earnings call is accompanied by an official…
What are Flotation Costs? Flotation costs are the costs that are incurred by a company when issuing new securities. The costs can be various expenses including, but not limited to, underwriting, legal, registration, and audit fees. Flotation expenses are expressed as a percentage of the issue price. After the flotation costs are determined by a…
What is the Yield to Maturity (YTM)? Yield to Maturity (YTM) – otherwise referred to as redemption or book yield – is the speculative rate of return or interest rate of a fixed-rate security, such as a bond. The YTM is based on the belief or understanding that an investor purchases the security at the…
What are CCPPO Shares? CCPPO (Cumulative, Convertible, Participating, Preferred-dividend Ordinary) shares are a rare type of equity shares issued by a company, which contain multiple features, including cumulative dividends, participation, convertibility into common shares, and a preferred-dividend feature. Understanding CCPPO Shares Essentially, CCPPO shares represent a combination of common and preferred shares. In the event…
What is Profit Before Tax (PBT)? Profit before tax (PBT) is a measure of a company’s profitability that looks at the profits made before any tax is paid. It matches all the company’s expenses, which include operating and interest expenses, against its revenues, but excludes the payment of income tax. A majority of entrepreneurs start…
What is Double Gearing? Double gearing refers to the practice of borrowing money against an asset, with the money being used to buy shares of stock. Then, more money is borrowed against the shares to establish a margin loan that can be used to purchase even more shares. In short, double gearing is a form…
