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Q:

Why would a company distribute its earnings through dividends to common stockholders?

Answer

Regular dividend payments are signals that a company is healthy and profitable. Also, issuing dividends can attract investors (shareholders). Finally, a company may distribute earnings to shareholders if it lacks profitable investment opportunities.

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Subject: Finance

Q:

What is insider trading and why is it illegal?

Answer

Undergraduates may get this question as feelers of their business knowledge. Insider trading describes the illegal activity of buying or selling stock based on information that is not public information. This is to prevent those with privileged information (company execs, I-bankers and lawyers) from using this information to make a tremendous amount of money unfairly.

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Subject: Finance

Q:

What is Bull Market?

Answer

Bull market is that market where stock value are expected rise and people will have tendency to sell their stock so as to earn profit out of it. Thus sudden push from the suppliers will gradually niutalise the market.


 

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Subject: Finance

Q:

Distinguish between speculator and hedger?

Answer

The main difference lies in the motive of the two parties. The main motive of the hedger is to hedge(minimize) the risk from the occurence of some events. 


The motive of the speculator is to gamble in the market in order to make the profit by buying/selling the derivative products.


 

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Subject: Finance

Q:

What Is Inflaition?

Answer

In economic terms, inflation is the rise in the prices of goods and services in the given economy over a period of time. As the prices rise, each unit of the country's currency will buy fewer goods and services.


when the purchasing power of a currency go down then more money comes to the market it is called inflation.

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Subject: Finance

Q:

Explain derivatives in terms of capital markets ?

Answer

The term derivative indicates that it has no independent value that is its value is entirely derived from the values of the underlying assets. The underlying asset can be securities, commodities , bullion, currency, livestock or anything else.

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Subject: Finance

Q:

what is the internal rate of return(IRR) of eurekaforbes?

Answer

Internal Rate of Return is that rate of Return at which the net present value is equal to Zero or it is the Rate which equates the present value of the cash inflows to the cash outflows.


NPV = Cash Inflow - Cash outflow


NPV = Zero


 

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Subject: Finance

Q:

What is the difference between real money & nominal money?

Answer

Nominal money relates more to it's measure of counting - so nominal figure of what is written on bill, while "real" relates more to it's purchasing power (usually between some periods of time). For instance 100 units in nominal could buy 2 units of good in 1950 and 1 unit of good in 2005, at the same time real value of this 100 nominal units are 100 real units in 1950 and 50 real units in 2005.


Same is with GDP. In nominal it can rise due to inflation while it can stay the same or even decrease in real value.

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Subject: Finance