What is the Expense Ratio in Mutual Funds?
The expense ratio may be described as an annual fee charged by mutual funds for managing your investments. Since it is a percentage of the average net assets of the fund, it will showcase the quantum of fees charged annually by a mutual fund in the process of managing your investments. The expense ratio reduces significantly, impacting one’s returns over time.
What is an Exit Load in Mutual Funds?
An exit load is taken by mutual funds when an investor exits the fund within a stipulated period. This charge persuades the investor not to trade in the short term. In addition, it covers redemption process costs.
What is XIRR (Extended Internal Rate of Return)?
XIRR is a technique to compute the annualized returns of an investment that has an irregular cash flow. Especially useful when dealing with SIP investments.
What is CAGR (Compound Annual Growth Rate)?
CAGR, or Compound Annual Growth Rate, measures the mean annual growth rate of an investment over a specified period longer than one year, assuming the profits are reinvested at the end of each period.
CAGR vs. XIRR: What is the Difference?
While CAGR gives the average annual growth rate of an investment, assuming that it has grown continuously during that period, XIRR takes into account irregular cash inflows and varying periods of investments; it is, therefore, a true return calculator for SIPs.
What is the P/E Ratio?
The P/E ratio refers to the Price-to-Earnings Ratio. It is an indicator of valuation that compares the current share price of a company against its per-share earnings. It assists investors in determining whether a stock is undervalued or overvalued.
What is AMC (Asset Management Company)?
AMC means Asset Management Company, which is a financial firm that pools money from numerous investors to invest in various securities. This pooling of funds will be managed further and invested toward achieving specific financial goals.
What is AUM (Assets Under Management)?
AUM stands for Assets Under Management, the value of all assets an investment company manages on its clients’ behalf. It is among the most important parameters for measuring the size and success of a company dealing with asset management.
What is EPS (Earnings Per Share)?
EPS stands for Earnings Per Share and is a financing statistic that depicts the profitability of a company. It is calculated by the division of the net profit of the company by the number of outstanding shares.
What is Beta in Stock Market?
Beta is the measure of volatility of the stock as compared to the overall market. The beta is greater than 1 if it is higher; it will be less than 1 if the volatility is less.
What is ROI (Return on Investment)?
ROI helps to track the performance measure that aims at assessing the effectiveness of an investment in use. It is obtained by dividing the profit by the cost of the initial investment.
What is DCF (Discounted Cash Flow)?
Discounted Cash Flow, commonly known by its short-form name, DCF, is a valuation method in which the price of an investment is determined by looking at the expected cash flows in today’s value.
What is IPO (Initial Public Offering)?
An IPO is the initial public offering where a private company issues shares to the public for the very first time in order to raise capital from public investors.
