Archives: Resources

Equity Derivatives

What are Equity Derivatives? Equity derivatives are financial contracts whose value is derived from the value of an underlying stock assets in the secondary market. Equity derivative contracts are complex financial instruments that are used for speculation, hedging and getting access to stocks or markets that would otherwise not be accessible. These contracts are agreements…

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Eurodollar

What is a Eurodollar? A Eurodollar refers to funds that are denominated in U.S. dollars and held in foreign banks or overseas branches of American banks. The funds can be in the form of cash deposits or term deposits. These deposits were originally held in Europe, hence the name “Eurodollar” (i.e., U.S. dollars held in…

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Face Value

What is Face Value? The value mentioned on an instrument like a coin, stamp, or bill is called the face value of that instrument. For example, a $100 bill comes with a face value of $100. In calculus, the face value of 3 in 546738 is 3 itself. Significance of Face Value In the era…

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Warrant

What is a Warrant? A warrant gives the holder the right to purchase a company’s stock at a specific price and a specific date. In other words, a warrant is a long-term option to buy a given stock at a fixed price. Such a type of warrant is called a call warrant, which gives the…

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Margin Debt

What is Margin Debt? Margin debt represents the amount that an investor owes a broker in their margin account. When a broker approves a margin account for an investor, the margin account is granted a line of credit that can be used to purchase securities. The brokerage charges an interest rate on the margin debt,…

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Margin Loan Availability

What is Margin Loan Availability? Margin loan availability refers to the funds currently available in a margin account that can be used to purchase additional securities. An investor can also withdraw the funds for personal use. A margin account allows investors to purchase more securities than they would’ve purchased using their actual deposits. When investors…

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Margin of Safety

What is the Margin of Safety? The margin of safety is an investment principle where the investor buys stocks when the market price is below their actual value. It is evaluated as the change between the price of a financial instrument and its basic value. The margin of safety acts as a built-in cushion that allows…

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Marginal Analysis

What is Marginal Analysis? Marginal analysis compares the additional benefits derived from an activity and the extra cost incurred by the same activity. It serves as a decision-making tool in projecting the maximum potential profits for the company by comparing the costs and benefits of the activity. The term “marginal” is used by economists to…

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Marginal Benefit

What is Marginal Benefit? Marginal benefit is the highest amount that a buyer is willing to pay for an extra unit of product. It is also known as marginal utility, and it accompanies any extra unit purchased after the first unit. A marginal benefit may also be used to refer to the satisfaction that a…

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Marginal Cost of Production

What is the Marginal Cost of Production? The marginal cost of production may be defined as the costs incurred for each extra output produced. For example, when a factory is operating at maximum capacity, processing additional products will require overtime pay for the workers. Generally, the marginal cost of production tends to rise as the…

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