Questions tagged [financial-literacy]
for questions related to understanding basic concepts in finance or certain terms in a particular context
640
questions
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What is the correct Formula for calculating fund growth with fees
I am considering two different options for a roth IRA. A managed fund that has a higher historical growth rate but 1% fee and a self directed vanguard account, which would have a lower growth rate but ...
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0
votes
1
answer
78
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IRR -> Reinvestment Assumption Or Myth (And What It Actually Means)
I've been trying to wrap my head around a downside of using IRR - the reinvestment assumption. I don't really understand the concept on how IRR assumes that we reinvest at the IRR, if IRR is for ...
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1
vote
1
answer
70
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What is a trust? (Canada)
I'm having a very difficult time researching what exactly a trust is. Is a for-profit company with some additional agreements? Is it a not for profit?
If it's neither of the two, and is simply a ...
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0
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1
answer
92
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Is it wrong to say that a company only has a single stock?
I'm a newbie to investing and I was doing some research regarding the difference between stocks and shares. According to Investopedia stock simply refers to partial ownership of a company, whereas a ...
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0
votes
1
answer
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Standard method for calculating YoY and YTD performance of an index or stock
I'm trying to understand how year-over-year and YTD performance values are calculated. I thought it was obvious and straightforward, but I can't replicate the values my bank shows for even a simple ...
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2
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121
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Resources vs. Assets
I read an excerpt on Quora from the book, "Rich Dad, Poor Dad":
If you want to be rich you must know the difference between an asset and a liability and you must buy assets. This may sound ...
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14
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11
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Does the debt snowball outperform avalanche if you put the freed cash flow towards debt?
There are two main algorithms for paying off debt;
The snowball, where you put your extra money towards the smallest debt to knock them off the board faster
The avalanche, where you put the extra ...
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1
answer
202
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How can I analyze my whole financial health?
I've tried Mint, but don't love it and all the ads.
I have all these csv spreadsheets of transactions from banks and credit cards. I can look at each one or create tabs and look at each tab and sort, ...
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0
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1
answer
314
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How to read CDs: price vs yield vs bid vs ask?
I'm trying to understand CDs by comparing the two:
NAME
CLOSING PRICE
CLOSING YIELD
CURRENT BID YIELD
CURRENT BID PRICE
CURRENT ASK YIELD
CURRENT ASK PRICE
Mountain Commerce Bank
99.68
5.694%
99....
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1
answer
179
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How to deal with insurance after car accident
My car met with an accident early January. The doors were slammed and the person who hit our car admitted his fault and confirmed his insurance will take care of expense. This is what happened (...
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2
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4
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97
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How to decide whether to pay an USD amount from my AUD account or from my EUR account?
Soon I have a payment of, say, 100 USD to make and I have an AUD account which holds enough currency and an EUR account which holds enough currency.
I wonder which account to choose?
Just looking at ...
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0
votes
1
answer
64
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How can one compare the yield of a municipal money fund with the yield of a municipal bond?
Let's consider the following municipal money fund and the following municipal bond:
The Schwab Municipal Money Fund (Investor Shares) (SWTXX) discloses a 7-day yield (with waivers) as of 02/28/2023 ...
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2
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5
answers
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What exactly is a professionally managed company? Why the promotor holding of professionally managed company is always 0%?
As you might have guessed by now, yes! I am new to the world of finance.
I have been going through a playlist on YouTube about investing in the stock market. And in one of the videos, I came across ...
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0
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1
answer
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How to calculate the APR on an investment?
I'm trying to boil this scenario down to an equation:
A token is worth $1.50. There is a total of 100 tokens invested. Last week, this investment earned $2 in interest.
Given this, how would I ...
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1
vote
2
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How do I buy a life insurance policy as a collateral? [closed]
I’m almost done paying my home, my wife wants to sell it and buy a bigger house using the money from the sale? Someone told me to borrow against the house instead of selling it, and then purchase a ...
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0
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3
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179
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Why is beta linear?
Alpha and beta are commonly used to metaphorically describe decorrelated vs. correlated return, implicitly following a linear regression of returns relative to some benchmark. But isn't the choice of ...
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2
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For mutual funds, does average annual return mean compounded annually or continually or daily?
Vanguard's Portfolio Allocations page (1926-2019) shows 9.21% Average annual return for 70% Equity and 30% Fixed income.
Does this mean 9.21% compounded annually?
GOAL...
If at age full retirement age ...
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14
votes
2
answers
5k
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Why is Year-Over-Year (YOY) important? [closed]
I have a question regarding Year-Over-Year (YOY) as I am really confused right now. Why is YOY important?
0
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0
answers
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Effective Maturity Calculation for prepaying securities?
Trying to find the best way to calculate effective maturity for prepaying securities (non-fixed income). My current understanding is that the link below is the best definition for effective maturity.
...
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2
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Is it becoming normal for young people to spend most of their income on rides and meals out? [closed]
Is it becoming normal for part-time and hourly employed people in their 20s (not college students) to spend most of their income on rides and meals out? If someone works 8 hours, spends 2 of those ...
user82816
2
votes
2
answers
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How to produce daily loan amortisation schedule
I've seen some examples of how to calculate an amortisation schedule either monthly or yearly. My bank charges interest on a daily basis so I'd like to create a spreadsheet detailing my current ...
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4
answers
118
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What is meant by daily high/low and monthly high/low when it comes to stocks?
I have started reading financial information. I see mention of stocks reaching "daily highs", "monthly highs" and so on.
What is the exact of these descriptions? What is a daily ...
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0
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1
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72
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How to calculate Average CAGRs?
I have sales by 30 different products over years (2015-2022). I need to compute Compound Annual Growth Rate, however some of the product groups have high CAGR and some of them have quite low CAGR. So ...
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1
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2
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114
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Calculating future value on an initial deposit and then, incrementing this initial deposit as a recurring deposit yearly
I have a scenario where $10000 was initially invested into a savings account, at 6% pa compounded yearly. An amount of $1000 is then added annually to this savings amount after the first year, and we ...
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2
answers
93
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what is more to Market Capitalization formula?
I wonder what is more to Market Capitalization formula ?
I am mostly an ETF investor, but follow some stocks with few # of shares and when I look at SPCE about 4-5 years ago its market capitalization ...
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votes
1
answer
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What does 'mutual' mean in mutual fund?
I am confused on the usage of 'mutual'. Is there any 'mutual benefit' or 'mutual dependence' between the participants (unit holders) in a mutual fund?
It looks more like a 'mixed fund' with diverse ...
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4
votes
4
answers
2k
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Financially stable. Now What? [closed]
I'm 43
0 Debt
Home Mortgage: PAID OFF
Several Cars: PAID OFF
Loans on renal property: PAID OFF
Credit Cards: PAID OFF
Personal Loans: PAID OFF
6mo+ Emergency Fund
Credit report clean and rising
I've ...
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0
votes
3
answers
322
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Does 20/4/10 rule really exist when financing car?
I saw the video the other day and it has "To afford a car one needs to have 20/4/10 rule". Do you need to put 20% down payment for 4 years and the payment shouldn't be more than 10% of your ...
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11
votes
2
answers
1k
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Long-term financial implications of selling stocks to get a higher house down payment
I have been searching for a house and am potentially going to make my first offer. I have cash on hand to make a 15% down payment on the place in question and enough money in stocks to comfortably get ...
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1
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6
answers
4k
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Why isn't there a universal investment standard/benchmark?
When I watch golf and look at the results of the top players, I can immediately know exactly how they compare both to the standard (called par) and to each other.
Why doesn't investing have such a ...
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0
votes
1
answer
80
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Corporate Finance Vs Corporate Finance? (w/ context differences)
I've heard corporate finance in 2 very different contexts, one referring to IBD, S&T, PE, VC and hedge funds, the other referring to a more financial accounting oriented role (at the same level w/ ...
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3
votes
1
answer
260
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Possible Car Dealership Scam
I am new to purchasing vehicles and handling financial matters in general. I am trying to improve my financial literacy but still have a ways to go. My father is currently trying to purchase a vehicle ...
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0
votes
1
answer
62
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What does "existing balance sheet cash" mean for a company, as compared to actual cash and cash equivalents?
I read that Li-Cycle (LICY), a Li-ion battery recycling company, is increasing the size of a large recycling plant. To do this:
The Company estimates that the Hub will require a total capital ...
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1
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2
answers
303
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What really is a recurring deposit?
What I do not understand is what is really meant by the term "recurring"? Also why is the minimum time limit between recurring and fixed deposit so different (min :6 months and min :7days) ...
0
votes
2
answers
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Is deal value equal to the enterprise value?
If a buyers pays $1.55 per share to get 6,480,000 shares of the target company such that the total outstanding shares of the target is 12,180,265.
So deal value is $1.55 x 6,480,000 = $10.044M, but is ...
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1
answer
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Is book value in BVPS really just shareholders equity?
So shareholders equity is total assets - total liabilities while book value is tangible assets - total liabilities. But apparently book value in practice could also just be total assets - total ...
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votes
1
answer
47
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How is BVPS calculated for common shares vs for preferred shares?
I've read a whole bunch of articles (eg: BVPS Definition) and all of them say BVPS is calculated using a formula similar to this:
(total shareholder's equity - preferred equity) / total outstanding ...
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0
votes
2
answers
101
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Foundational equations or concepts of Finance [closed]
For the other sciences it´s easy to point to the most important equations, inequalities, propositions or concepts that ground the discipline. If I want to explain Finance to a physicist say, what are ...
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2
votes
2
answers
169
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Market Cap, NAV and finite resources
Gave a read through this question and I believe I understand the following:
NAV is the sum of a companies assets; represents the value if the company was liquidated
Market Cap is (shares outstanding ...
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3
votes
2
answers
329
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Office and the human capital [closed]
I heard a business man saying "The Office is not a storage of the Human Capital".
I do not understand this phrase and I believe there is an interesting and intuitive analysis behind it. Can ...
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36
votes
8
answers
9k
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We're in an asset bubble currently, what can I do about it?
My opinion is that we are in an asset bubble: house and property prices are sky-rocketing, interest rates are low, and inflation rates are high.
I'm aware of the futility of trying to time the top of ...
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1
vote
1
answer
205
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How does the continuously compounded interest formula work in terms of months?
The continuously compounded interest formula is:
Pe^rt
Where:
P = Principle
e = 2.718...
r = Annual interest rate
t = time in years
If instead of an annual interest rate, I got a monthly interest ...
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1
vote
1
answer
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Is using proceeds from a short sell or put option to cover the cost of excercising a call option considered freeriding?
I heard that freeriding is not having the cash to pay for the underlying shares when a call option is exercised.
If I purchase a call option that is ITM and (purchase a put OR short sell) above the ...
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12
votes
1
answer
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Why would you risk bankruptcy if you lend more money than you own?
Difficult to summarize the question in just a few words, so let me elaborate here. I am currently reading the Financial Times Guide to Banking by Glen Arnold, section Money creation, and there is ...
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2
answers
174
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What are non-banking financial companies?
I read in the book Indian Economy by Ramesh Singh that,
NBFCs are fast emerging as an important segment of Indian financial system. It is an heterogeneous group of institutions performing financial ...
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1
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1
answer
257
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Would shipping costs count as COGS? [closed]
I'm coming from non-accounting and non-finance backgrounds. I need help in form of understanding through a question.
When a company sends items to club members but is charged for shipping fees from a ...
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votes
2
answers
185
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What is the US subprime crisis of 2008? [closed]
I have heard that after the US subprime crisis of 2008,particularly a lot of people were pointing fingers at the Economic policymakers. I am not really familiar with why it is so, a detailed ...
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1
answer
117
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Why is mandatory vehicle test and vehicle lifetime a part of the union budget? [closed]
Why is the vehicle test and vehicle lifetime included here. What has the vehicle to do with the Union Budget?
https://thedailyguardian.com/union-budget-2021-voluntary-vehicle-scrapping-policy-and-its-...
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2
answers
170
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A doubt in definition of banks
"Banking means accepting money for the purpose of lending or investment,of deposits of money from the public,repayable on demand or otherwise,and withdraw able by cheque,draft,order or otherwise.&...
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votes
6
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2k
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What is a fair way to split the profits for a co-owned property?
Seeking out some financial guidance...
My partner and I recently purchased a home with my sister and brother-in-law. All spaces will be shared with the exception of bedrooms. We will be meeting with ...
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