Tutor profile: Harshvardhan B.
Subject: Personal Finance
What are the 3 key factors to keep in mind when creating an investment profile for an individual?
The 3 major factors are: -Risk appetite (whether the individual is risk-averse or risk lover) -Investment horizon (for how long the individual wants to invest) -Investment Objective (what is the ultimate goal for the investment)
How do you calculate the Weighted Average Cost of Capital (WACC)?
WACC is the cost to the company for raising the capital. It is calculated on the basis of proportional weights of debt and equity in the total capital structure. WACC = Wd * Kd + We * Ke Wd = weight of debt in total capital structure Kd = Cost of debt We = weight of equity in total capital structure Ke = Cost of equity
If a central bank reduces interest rates, how will it affect the Foreign Exchange Reserves (FX) of the country?
As interest rates decline, investors pull out their money, resulting in the outflow of the money from the economy and deterioration of the home currency, affecting negatively to the FX.