The payback period is the time it takes for a project to recover the investment cost. For example, if you invest $100 and the returns are $50 per year, you will recover your initial investment in two years.
Investing in Ethereum is a good alternative for people interested in disrupting innovations with high growth potential and cryptocurrencies in general, and be willing to accept the inherent high price volatility.
Investors in cryptocurrencies are advised to diversify it’s portfolio, and only invest money if they are able to afford capital losses in the case of short term price fall. Anyway, Ethereum is a promising technology in the long term.
Index investing is a form of passive investing that consists in archive the same return as a market index. Usually, it consist in purchasing shares of an index funds. Index funds are mutual funds that mimic the composition of a market index, like the S&P 500 or the Dow Jones Industrial.
Crude oil can be classified mainly according to it’s density and according to it’s sulfur content.
The density measures how compact or concentrated the crude oil is. A light crude oil has a lower density and a heavy crude oil has a larger density. Light crude oil has relatively lower costs of extraction and refining. Gasoline and diesel fuel are cheaply produced from light crude oil.
Capital budgeting is a process that assess the convenience of carrying out an investment or not. If there are many profitable investments available, the capital budgeting tries to find out which one is more advisable.
An investment project is a detailed proposal of an expenditure of liquid resources, with the objective of taking actions that will lead to future profits.
- An investment project is made before the investment itself.
- An investment implies an expenditure of resources, but it doesn’t necessarily means that those resources are our own resources: a lot of investments are carried out by borrowing money.
The nominal exchange rate is defined as:
The number of units of the domestic currency that are needed to purchase a unit of a given foreign currency.
For example, if the value of the Euro in terms of the dollar is 1.37, this means that the nominal exchange rate between the Euro and the dollar is 1.37. We need to give 1.37 dollars to buy one Euro.
Every investment has some risk. The investment risk is defined as the probability that the yield is lower than expected.
On average, riskier investments tend to have a higher yield, in the long run. Some investors are willing to accept a higher volatility, to receive a higher average return.
The capital market is a set of institutions through which the supply and demand of long and mid term means of financing, like stocks and mid- and long-term debt, meet.
Through the monetary market, unlike the capital market, short term assets are bought and sold. Together, the capital markets and the monetary market form the financial market.
Examples of assets traded in the capital market:
- Stocks.
- Long term government bonds.
- Long term corporate bonds.
Good policies to minimize credit risk.