Expense Ratio
What is the Expense Ratio? An expense ratio is a fee charged by an investment company to manage the shareholders’ funds. Investment companies such as mutual funds often incur various operating expenses when managing investors’ funds, and they charge a small percentage of the funds under management to cover the expenses. Some of the expenses...
Capital
What is Capital? Capital is anything that increases one’s ability to generate value. It can be used to increase value across a wide range of categories, such as financial, social, physical, intellectual, etc. In business and economics, the two most common types of capital are financial and human. This guide will explore all the above...
Debt vs Equity Financing
Debt vs Equity Financing: Which is Best? Debt vs Equity Financing – which is best for your business and why? The simple answer is that it depends. The equity versus debt decision relies on a large number of factors, such as the current economic climate, the business’ existing capital structure, and the business life cycle...
Fama-French Three-Factor Model
What is the Fama-French Three-Factor Model? The Fama-French Three-Factor Model is an extension of the Capital Asset Pricing Model (CAPM). The Fama-French model aims to describe stock returns through three factors: (1) market risk, (2) the outperformance of small-cap companies relative to large-cap companies, and (3) the outperformance of high book-to-market value companies versus low...
Financial Intermediary
What is a Financial Intermediary? A financial intermediary refers to an institution that acts as a middleman between two parties in order to facilitate a financial transaction. The institutions that are commonly referred to as financial intermediaries include commercial banks, investment banks, mutual funds, and pension funds. They reallocate uninvested capital to productive sectors of...
