Financial Markets: What Is The Price To Earnings Ratio?

Financial Markets: What Is The Price To Earnings Ratio? For those without experience, the stock market can seem like a complicated entity.  But the reality is that most of the strategic conclusions that are drawn by hedge funds and other large investors can be boiled down to relatively simple math equations. One example is the … Continue reading Financial Markets: What Is The Price To Earnings Ratio?

Finances at Work: The Time Value of Money

Finances at Work:  The Time Value of Money Whenever we are looking to understand the true value of money, it is absolutely critical factor time into the equation.  This is ultimately because $1 Dollar received today is more valuable than $1 Dollar received tomorrow.  There are a few different reasons to explain why this is … Continue reading Finances at Work: The Time Value of Money

News Flash – Canadians Don’t Use RRSP Room

Canadians are expected to contribute a record $38.6 billion towards their RRSPs in 2014 but this number is minuscule compared to the $951 billion in unused RRSP contribution room. The number of contributors from 2013 to 2014 was in fact up 3.2% Fewer than 40 per cent of Canadians between the ages of 25 and … Continue reading News Flash – Canadians Don’t Use RRSP Room

What are Financial Assets? Securities, Gains

Companies need money to spend but their money comes from more places than just profit. There are a number of methods to raise money to finance activities including the following instruments: a) Debt Securities (contracts to repay with securities) – Bonds: secured with assets – Debentures: unsecured – Notes: typically short term

Consumption Bundle Assumptions

Introductory Macroeconomics Following up from our introduction to economics/macroeconomics article, this post talks about ‘self-interest’ and maximizing over a set of preferences subject to constraints. Let’s start off with some examples, but first, the tools we’ll need (some images used because it’s a bit tough to get the right characters). Consumption Bundle (CB): Preference Ordering: … Continue reading Consumption Bundle Assumptions

What is an Option? Basic Option Terminology

What is an option? In the stock market there are a variety of financial instruments that sell not only stock, but ‘short or long’ positions based on expectations. Put Options are contracts between a writer (seller or issuer) and a holder (buyer or investor). The buyer purchase the right to sell a particular stock to … Continue reading What is an Option? Basic Option Terminology

Seven Different Classifications of Financial Markets

We just finished five classifications of capital markets, so why not the financial markets as well?. Here is a list of the seven different classifications you’ll find in the financial markets. 1) Debt vs. Equity Markets – Legal obligation vs. – Ownership position in the business 2) Primary vs. Secondary – New issues vs. – … Continue reading Seven Different Classifications of Financial Markets

Why Bonds Trade at par, Discount, or Premium

Here is a quick reference chart to help you determine market price and coupon rate of bond trades. – When a bond trades at par value: – Market Price = face value – Coupon Rate = market interest rate – When a bond trades at a discount: – Market Price < face value – Coupon … Continue reading Why Bonds Trade at par, Discount, or Premium

How to Invest in Volatile and Recessionary Markets

*Posted in 2009* So you’ve lost 50% of your portfolio and wondering what to do and how you could have avoided the pain. Most are hearing sit tight, which is true, or heck, even buy, which is even more true. But is there anything you could or can do in a market that is in … Continue reading How to Invest in Volatile and Recessionary Markets

Five Major Categories of Capital Markets

Here is a list of five major categories of capital markets and some corresponding investment instruments. Capital markets include the likes of the stock and bond markets and consists of companies or the government raising money for themselves. (List of Typical Securities Traded) 1) Bond Market (ideally holdings for 3 yrs and up) Mortgage bond: … Continue reading Five Major Categories of Capital Markets