Internal Rate of Return (IRR) is a popular investment evaluation method, as it offers the profitability of a project in percentage terms. The IRR criterion is also popular because it can be easily compared with the opportunity cost of capital. However, like all other investment evaluation methods, it also has ... Read More

Bullish SpreadA Bullish Spread or Bull Spread is a strategy in which the traders of options profit from the increase of the price of the underlying asset of the option. This strategy may contain both put and call options with different strike prices. In a bull call spread, an option ... Read More

The "butterfly options strategy", also called "butterfly spreads" contain both bullish and bearish options. The trader in butterfly spreads has four options having the same expiry dates but three different strike prices. The trader buys two options contracts that have a higher and lower price, and two contracts with a ... Read More

The prices of shares keep moving up and down in the market and hence, they are called "volatile" which means not constant over time. Implied volatility means how much the price of an option will move in a given period of time. The term is more applicable in the case ... Read More

Businesses need to take various investment decisions from time to time to stay functional and competitive. These decisions not only increase the competitive edge of a company but also add new dimensions to the existing manufacturing and financial position of a company.The investments needed for growth can be divided into ... Read More

American vs. European Stock OptionsAmerican and European stock options have some similar qualities but their differences are equally important. For instance, American-style options owners may exercise their options at any time before the option expires, while European-style options owners may exercise their rights only at expiration or maturity.Most equity options ... Read More

What is Beta in Finance?The beta (β) of a stock or any other investment security is a calculation of its volatility of returns in comparison to the entire market. It is utilized as a calculation of risk and is an important part of the Capital Asset Pricing Model (CAPM). A ... Read More

An option that has stock as its underlying asset is called a "stock option." There is another type of option that deals in the index, known as the "index option." The payoffs or risk-rewards that are appropriate for stock options are applicable in the case of other options as well ... Read More

What is Beta of a Company?The "beta" of a company is an indicator of how sensitive the stock prices of the company are to systematic risk. Systematic risks are usually measured by looking at the return on a "market portfolio, " a portfolio that contains enough stocks and other investment ... Read More

Financial leverage is used to buy more debt to buy more assets. However, an excessive amount of financial leverage increases the risk of failure, as it is more difficult to repay debt. Most of the companies have some level of financial leverage, however caution must be taken not to overdo ... Read More