In continuing our theories on capital structure – an important component which isn’t discussed in the last post is the assumptions of capital market theory which builds quite well onto the Markowitz portfolio model and the assumptions of the Markowtiz model – but with some additional add ons which are unique to capital market theory. [...]

I thought it would be useful to look at some of theories of capital structure and what their purpose is, how they apply to companies and whether we really need to know about them as investors. Evidently, the later part of this statement is true – all parts of finance are indeed useful – and [...]

A topic that I thought I should write a bit more about is the basics of bonds and their overall importance in the market place. Most people typically ignore bonds, and associate little value to them – this is despite the fact that bonds are worth more, on a global basis, than all stocks. The [...]

Yes, I was right and maybe Glenn Stevens, the RBA Governor does read this blog. I stated at few days ago that the RBA needed a 50 basis point cut to the official cash interest rate “like yesterday” – and today the RBA have cut it by a full percentage point. The cut puts the [...]

I thought I would make a quick post just to explain the misconception of the term ‘market-to-market’ – which is really not a financial term – rather its ‘marked-to-market’. I have gotten a few emails of people asking me what exactly this means and whether I could provide a really simple explanation of this term. [...]