What is a Mixed Cost? Definition, Formula, Example, and Importance

Finance

Definition During the normal operation cycle, there are several costs that businesses normally incur. Classification of these costs tends to be important because it helps organizations make important decisions regarding pricing and product strategy. Costs within an organization are mainly divided into fixed and variable costs. As far as fixed costs are concerned, it cannot …

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What are Zero-Coupon Bonds? (Definition, Formula, Example, Advantages, and Disadvantages)

Stock

What are Zero-Coupon Bonds? A zero-coupon bond is a financial instrument that does not render interest. They normally trade at high discounts, and offer full face par value, at the time of maturity. The spread between the purchase price of the bond and the price that the bondholder receives at maturity is described as the …

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What is the Book Value of Equity? Definition, Component, Formular, Calculation, and More

Equity financing

Definition: Book value of Equity can define as the company’s common equity, which is simply the amount that is available to be distributed within the shareholders. It is the net amount of the total assets of the firm, after all the liabilities have been subsequently paid off. Therefore, is can simply be described as the …

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Back to Back Letter of Credit: How does it work? Definition, Advantages, And More

Letter of Credit

It is the form of documentary credit where the first party uses a letter of credit to secure another Letter of Credit facility. It uses two letters of credit for one financial transaction. The sellers use this option to secure a credit facility by pledging the credit received from the buyer’s bank. It may work …

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Letter of Credit Discounting: How Does It Work? Advantages, Advantages, and Limitation

Letter of Credit

Letters of credit facilitate international trades between unknown parties. An LC reduces the trust deficit between the seller and buyer. However, the clearance of funds with documentary credit often takes a long time. The sellers use the discounting of LC in their favor to receive short-term financing. What is the discounting of a Letter of …

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Transferrable Letter of Credit: How Does It Work? Criteria, Features, Pros, and Cons

Letter of Credit

A transferable letter of credit provides the option of transferring the credit to a second beneficiary. The first beneficiary of a letter of credit is the seller (exporter). A transferrable LC allows the transfer of approved credit partially or in full to another party. A transferrable documentary credit is used often in agreements where the …

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6 Main Sources of Equity Financing (Advantages and Disadvantages Explained)

Finance

Equity means a stake, ownership, or ownership rights in a business. Commonly, it is used synonymously as shares. Not all businesses can afford the company listing on the stock markets. Yet, there are several options that small businesses can utilize to secure equity financing. Any source of finance that comes with ownership rights can be …

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Sources of Debt Financing: 3 Potential Sources, Cost, Advantages and More

Finance

In layman’s terms debt financing means borrowed money. Lenders and creditors earn interest by lending money to the borrowers. The essential use of debt financing is providing financing to the business or individual. However, the implications of debt financing are stretched beyond financing to investments as well. Debt financing can be classified by type, maturity, …

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