Cost of Capital
What is Cost of Capital? Cost of capital is the minimum rate of return that a business must earn before generating value. Before a business can turn a profit, it must at least generate sufficient income to cover the cost of the capital it uses to fund its operations. This consists of both the cost...
Clawback
What is Clawback? What happens when a person promises to perform and then fails to deliver on their promises? Or what happens when it is found that a performance report is flawed? In some situations like that, clawback provisions, as stated in a signed contract, come into play. Clawback is a provision under which money...
Market Risk Premium
What is the Market Risk Premium? The market risk premium is the additional return an investor will receive (or expects to receive) from holding a risky market portfolio instead of risk-free assets. The market risk premium is part of the Capital Asset Pricing Model (CAPM) which analysts and investors use to calculate the acceptable rate...
Coupon Rate
What is the Coupon Rate? The coupon rate is the amount of annual interest income paid to a bondholder, based on the face value of the bond. Government and non-government entities issue bonds to raise money to finance their operations. When a person buys a bond, the bond issuer promises to make periodic payments to...
What is a Stakeholder in Business?
What is a Stakeholder? In business, a stakeholder is any individual, group, or party that has an interest in an organization and the outcomes of its actions. Common examples of stakeholders include employees, customers, shareholders, suppliers, communities, and governments. Different stakeholders have different interests, and companies often face trade-offs in trying to please all of...
