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Discount Rate—Explanation, Definition and Examples

Valutico

Key takeaways: The discount rate is primarily used by central banks to manage the economy and investors to calculate the present value of future cash flows from an investment. It’s vital to determine the correct discount rate for company valuation, factoring in the time value of money. In this article, we cover the latter.

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Valutico Announces Six New Features  

Valutico

The logical structure and cleaner aesthetic enhance the presentation of results, all while preserving the customization features that provide the ability to white label your reports. The customization options ensure that your unique insights can be presented in a format that aligns with your preferences and brand identity.

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Convertible Arbitrage Hedge Funds: The Perfect Combination of Investment Banking and Sales & Trading?

Brian DeChesare

Convertible Arbitrage Definition: Convertible arbitrage is a relative value strategy in which a hedge fund profits based on the pricing discrepancy between a company’s convertible bonds and its underlying stock; the fund exploits changes in volatility, credit quality, and interest rates to make money while minimizing overall market risk.

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Review the concept of WACC

Andrew Stolz

The formula implies the return an investor expects from a risk-free investment plus the return from the stock in relation to market volatility. The market risk premium is calculated from a market rate of return less a risk-free rate. Suitability and limitation.

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Discounted-Cash-Flow-Analysis: Your Complete Guide with Examples

Valutico

The DCF method takes the value of the company to be equal to all future cash flows of that business, discounted to a present value by using an appropriate discount rate. A discount rate, or discount ‘factor’, is calculated and applied to each year’s cash flow, in order to arrive at the present value. . It was worth $24.8