Finance Questions

Internal Rate of Return is that rate of Return at which the net present value is equal to Zero or it is the Rate which equates the present value of the cash inflows to the cash outflows.

NPV = Cash Inflow - Cash outflow

NPV = Zero

EBITDA stands for earnings before interest, taxes, depreciation, and amortization. EBITDA came into wide use among private capital firms, wanting to calculate what they should pay for a business.

When a company or corporation earns a profit or surplus, that money can be put to two uses it can either be re-invested in the business called retained earnings or it can be paid to the shareholders as a dividends.

Investment and asset are really close in meaning. Investment is when you put your money in stock, bond or other financial instruments. Whereas Asset is what you own generally reffered to land, proprietorship , factory, etc.

A journal is also called as a book of prime entry.Transactions occurred are first entered in this book to show which accounts should be debited and which should be credited.

on the basis of entries made in the journal, accounts are prepared, the book which contains the accounts is called a ledger. Transactions entered in the journal are classified according to their nature and posted in their respective accounts in ledger. it is also called as book of final entry.

CDs are the least risky investment choice when compared to flipping, renting and bonds.

A certificate of deposit (CD) is a savings certificate with a fixed maturity date, specified fixed interest rate and can be issued in any denomination aside from minimum investment requirements. A CD restricts access to the funds until the maturity date of the investment. CDs are generally issued by commercial banks.

CDs are issued by the bank and are guaranteed by the government. So even if the bank goes bankrupt the investor's money is guaranteed to a certain extent.

Flipping and renting are subjected to market fluctuations while bonds are not insured.

Secondary market refers to market where securities are traded after being initially offered to the public in the primary market and/or listed on the stock exchange.

Nominal money relates more to it's measure of counting - so nominal figure of what is written on bill, while "real" relates more to it's purchasing power (usually between some periods of time). For instance 100 units in nominal could buy 2 units of good in 1950 and 1 unit of good in 2005, at the same time real value of this 100 nominal units are 100 real units in 1950 and 50 real units in 2005.

Same is with GDP. In nominal it can rise due to inflation while it can stay the same or even decrease in real value.