Mutual funds are of various nature depending on the needs and requirements of investors. However, the most common factor that separates them is their risk appetite. The riskier firms offer better returns on investment while the less risky ones provide fewer returns.There are predominantly two types of funds: Debt Funds and Equity Funds.Debt FundsDebt funds usually invest the cumulative investment of the investors in money market instruments. Some examples of money market instruments are Treasury bills, G-Secs, Non-convertible debentures, and Commercial Papers, etc. Debt funds have much lesser risk than equity funds but their return is low too.Equity FundsThese funds ... Read More

A Capital Market is a place where investors and borrowers deal with each other. So, a finance manager must be aware of the markets. The value of securities and how they're traded in the markets should also be in the knowledge of the manager.Capital markets are where the securities are traded and companies can invest in prospective companies that have chances to become successful in the future. However, although it might sound easy, it is a complex process altogether.Note − Capital Markets can provide good returns on investment but no one can guess it 100% right.It is complex because no ... Read More

The conflict between the managers and shareholders of a company is known as the Agency Problem. Agency problems may have a variety of reasons but the most common reason for such a problem to arise is due to the lack of interest in shareholder's wealth maximization.Shareholders usually invest in a company to gain the most profits and an organization that fails to provide value is deemed unsuccessful. The reasons for failing in meeting shareholders' requirements despite having profit may be due to the self-interest of managers. In such cases, the shareholders should get priority.Stakeholders BenefitsModern companies usually pay more attention ... Read More

The decisions that the management of an organization needs to take regarding the payout of dividends are known as Dividend Decisions. The companies usually want to maximize shareholders' wealth and hence a distribution policy of maximum dividend payout is required. However, if the company pays out all the profits, it may face cash constraints in the future. So, sustained earning is also necessary.Looking at all these factors, a company needs to depend on the following factors to build a good dividend policy.Note − A good dividend policy establishes faith in the shareholders' minds.Considerations for Creating a Good Dividend PolicyCash Requirements ... Read More

In business practices, finance-related functions and management-related functions usually overlap each other. The finance function and the management function go hand-in-hand in most cases. For example, the Operations Managers looking to install a new machine (the Management Function) must get the money which is part of the Finance Function.Usually, the finance function is the backbone of all management functions.Without financial functions, most and marketing operations will become redundant. Still, there is a fine line that separates management functions and financial functions. However, it is more important to study the overlapping situation than to look at the differences.Note − Financial and ... Read More

Financial Managers take investment decisions for the well-being of the company. Every company seeks the best outcome from their decisions and hence every company strives to strike the best cord in terms of financial management.However, there are certain natures of investments every manager should be aware of. Finance Managers usually pay much attention to investment decisions, as these are some of the basic decisions businesses must make to survive and grow.Here are some of the characteristic features of Investment Decisions.Investment Decisions Are Long-term in NatureInvestments are meant for the long term and they have a future probability of profits or ... Read More

Although Profit and Wealth Maximization sound pretty similar, there are some major differences between them. While profit maximization aims at increasing the profit of a firm, wealth maximization has a larger role to play and it deals with the wellbeing of the stakeholders as a whole.Profit Maximization Vs Wealth MaximizationHere are some major differences between profit maximization and wealth maximization in brief.Profit and wealth maximization deal in different subjects and hence they are defined differently. Profit maximization refers to the management of a firm's resources and utilities to maximize profit. On the other hand, wealth maximization refers to managing the ... Read More

When compounding is applied to an investment for an indefinite period and interests are added to the principal amount + interest on each period, it is called continuous compounding. In such an arrangement interest is added after each period and interest is compounded on the total amount in the next period (balance).Continuous Compounding may be done on a regular basis, such as monthly quarterly, semi-annually and annually. The process goes on for indefinite number of periods and interest may be earned forever too. Thus banks and financial institutions prefer such kinds of investments.One may seek Continuous Compounding for a variety ... Read More

A Finance Manager is a professional who manages the financial functions of an organization. As such, the financial manager is a top-ranking official in the business and he or she plays a vital role in making the business become successful. In the past, financial managers were not considered for the top-ranking or decision-making roles, but with time, the perceptions have changed.A modern financial manager is a top boss who knows much about the company's financial procedures. He or she is considered a vital employee of the organization and he plays a key role in managing the finances of the company. ... Read More

There is more than one definition of capital recovery in finance. When someone makes an investment on a company or an asset, he or she gets a negative return until the whole amount is returned. The RIO (Return on Initial Investment) made in such cases is called capital recovery.There can be other definitions too. For example, capital recovery occurs when a company sells its machinery and recollects the money invested in them. In broad terms, capital recovery is the money that is the investment or money gained back from a project. Capital recovery is applicable to the asset's life span ... Read More