Finance / June 27, 2018 / Parker Hardy
Oftentimes, a personal loan is an unsecured loan. That is, the loan is made purely on the basis of the borrower's trustworthiness, and not secured by some form of collateral. Car loans are different in that they are almost always secured loans, whose collateral is the vehicle itself. And that means that if the borrower fails to make his or her payments, the vehicle will be repossessed and sold to pay off the loan debt.
A company's weighted average cost of capital (WACC) is the average interest rate it must pay to finance its assets, growth and working capital. The WACC is also the minimum average rate of return it must earn on its current assets to satisfy its shareholders or owners, its investors, and its creditors.
Analysts and investors will frequently refer to something called the net working capital. Or a lot of times they will just call it working capital for short. So working capital is very simple it’s like the current assets minus the current liabilities of a firm. When valuing the companies the "change in working capital" is more useful.
While cumulative interest is one method of calculating how well a bond investment is performing, the following are more comprehensive yield methods: nominal yield, current yield, effective annual yield, and yield to maturity.
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