Stock

How to Calculate the Market Value of Debt? (Definition, Formula, and Example)

Definition The market value of debt is the price or amount that an investor is willing to pay to buy a company’s debt instrument. This amount is usually different from the book value present in the company statement of financial position. Alternatively, it is the cost of replacing the debt if the company replaces it …

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What is the Conversion Premium? And How Issuer Uses Conversion Premium?

Conversion premium is the term used in the financial market in connection with convertible securities. Thus, to understand the conversion premium, the reader should have a clear concept of convertible securities. Convertible securities As the name suggests, conversion securities are the select type of securities, “which are convertible into something else.” What that “something else” …

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What is an Irredeemable Debt? Definition, Explanation, Examples, And More

Definition Irredeemable debt stands for debt with no maturity date and pays regular interest rates for an unlimited time. Theoretically, we presume that the debt’s nominal (par) value is never reimbursed to the debt holders. Instead, they get in return a benefit from an infinite number of coupons or interest payments. Irredeemable debt is also …

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What is the Weighted Average Cost of Capital (WACC)? Definition, Formula, and Example

Definition A company’s weighted average cost of capital is the cost of all its equity and debt instruments proportionately weighted. These instruments may include common shares, preferred shares, and debt instruments of a company. The cost of capital is the required rate of return of a company on any project. The cost of capital of …

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How Many Types of Preference Shares? Definition, 5 Types, More

Definition: Preference shares, also known as preferred stock, are preferred over ordinary or common shares. This preference is given when a company pays dividends. Preference shares are also preferred to common shares when a company is liquidated, but a company’s liquidation occurs in rare cases. The majority of preference shares also have a pre-determined amount …

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What are Retained Earnings? Definition, Formula, and Calculation

Definition: Retained earnings are profits or earnings of the business that have been kept for business use and not distributed to the owners or stockholders. In other words, retained earnings are accumulated earnings of a business after paying dividends or drawings to its stockholders or owners. Retained earnings can also be accumulated losses of the …

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