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A capital requirement (also known as regulatory capital, capital adequacy or capital base) is the amount of capital a bank or other financial institution has to have as required by its financial regulator. This is usually expressed as a capital adequacy ratio of equity as a percentage of risk-weighted assets.
Internal rate of return (IRR) is a method of calculating an investment's rate of return. The term internal refers to the fact that the calculation excludes external factors, such as the risk-free rate, inflation, the cost of capital, or financial risk. The method may be applied either ex-post or ex-ante. Applied ex-ante, the IRR is an estimate ...
The market structure determines the price formation method of the market. Suppliers and Demanders (sellers and buyers) will aim to find a price that both parties can accept creating a equilibrium quantity. Market definition is an important issue for regulators facing changes in market structure, which needs to be determined. [1]
Alternate approaches within DCF valuation will more directly consider economic profit, and the definitions of "cashflow" will differ correspondingly; the best known is EVA. With the cost of capital correctly and correspondingly adjusted, the valuation should yield the same result, [10] for standard cases. These approaches may be considered more ...
Return on investment (%) = (current value of investment if not exited yet or sold price of investment if exited + income from investment − initial investment and other expenses) / initial investment and other expenses x 100%. Example with a share of stock: You bought 1 share of stock for US$100 and paid a buying commission of US$5.
In economics and accounting, the cost of capital is the cost of a company's funds (both debt and equity), or from an investor's point of view is "the required rate of return on a portfolio company's existing securities". [1]
Institutions were allowed to choose between the initial basic indicator approach, which increases the minimum capital requirement in Basel I approach from 8% to 15% and the standardised approach, which evaluates the business lines as a medium sophistication approaches of the new framework.
Capital budgeting in corporate finance, corporate planning and accounting is an area of capital management that concerns the planning process used to determine whether an organization's long term capital investments such as new machinery, replacement of machinery, new plants, new products, and research development projects are worth the funding of cash through the firm's capitalization ...