Zebu blog

Tag: Financial Metrics

  • How To Figure Out The Yield And Price Of Bonds

    Many investors find it hard to understand bond prices and the possible returns from bond investments. Many new investors will be shocked to learn that the value of bonds changes every day, just like the value of any other publicly traded security.

    The yield is the amount of money someone can expect to make from investing in bonds. The easiest way to figure this out is to use the formula yield = (coupon amount) / (price). If the bond is bought at face value, the yield may be the same as the interest rate. So, the yield changes along with the price of the bond.

    Another yield that investors often figure out is the amount of money they get back when their bonds mature. This more complicated calculation will give the expected total yield if the bond is held until it matures.

    What are the parts of market bonds?

    If you want to learn more about the different kinds of bonds you can invest in, you can choose from a wide range of bonds on the market. The bonds you choose to buy in the end will depend on how well you can handle risk and how much money you have to invest. Even though bonds are safer than stocks, they come in many different types, so you should learn about all of them before you invest.

    Most bonds can be broken up into:

    Government bonds: These are bonds that the government itself gives out. Because the Indian government paid for them, they are safe. Most of the time, the interest rate on these bonds is not very high. In the Reserve Bank of India’s list of “government bonds,” there are other differences between fixed and floating bonds. You should know a little bit about these subcategories because they might affect the investments you make.

    Fixed-rate securities: These are bonds with a fixed interest rate. This rate won’t change as long as the bond is in effect. Even if market rates change, this fixed rate will still apply. When the market is doing well, you can expect small returns, but you are also protected.

    Bonds with variable rates: As their name suggests, the interest rates on these bonds will change based on the highs and lows of the market. If the market changes in a good way, you could make money, but if they change in a bad way, you could lose your profits.

    Corporate bonds: bonds from private companies are called corporate bonds. The bonds that these companies give out can be secured or not. When choosing a market, you should be aware of the different types of corporate bonds. Corporate bonds that are backed by collateral are safe. This means that the issuer will pay back the investment if the bond goes bad before or at the time it is due. Debentures are basically unsecured corporate bonds, and all they are is a promise from the company to pay back the bond. In other words, businesses promise to pay interest on time and pay it when it’s due. These bonds could be a bet on the value of “faith” more than anything else.

    Bonds that save people money on taxes: The Indian government gives out bonds that save people money on taxes or are tax-free. Aside from the interest, the owner would also benefit from a tax point of view. Seniors and anyone else who wants to pay less in taxes over time might want to look into these bonds.

    Bank and financial institution bonds are bonds that banks and other financial institutions give out. Many of the bonds in this category come from this business sector. The financial institutions that back these bonds have been rated by the government and have a history of making good financial decisions.

  • What Is EBITA And Is It Important For Investors To Know?

    The letters “EBITA” are important in the financial world today. Before investing in a company, investors look at its EBITA to see how effective it is, how much money it makes now, and how much it could make in the future. Because of this, knowing what EBITA means is very important when making predictions about a company.

    What Does “EBITA” Stand for?

    Investors often use the term “Earnings before interest, taxes, and amortisation,” which is written as “EBITA.” You should know how investors use the term “EBITA” so that you can give a better explanation for the important parameter. EBITA is useful for investors because it lets them compare different companies. Also, these comparisons are made between companies that work in the same industry. When investors want to figure out how well a company has done over time, they can use EBITA to get an accurate picture of how it makes money (and profit-making ability).

    What function does EBITA serve?

    When investors want to put money into a company by buying its stocks or shares, they look at its EBITA. This is the company’s net income before income, taxes, and amortisation are taken out. EBITA shows a company’s true profit without taking into account the cost of financing. So, it gives stockholders an accurate picture of how much money a company makes and how well it runs. So, based on these factors, it tells investors whether or not they should buy the stock. This shows why EBITA is important on the stock market and answers the question “What is EBITA on the stock market?” As EBITA suggests, you can learn about a company’s creditworthiness which can be found in major websites like NSE India. Before you put money into online trading, you should figure out your EBITA.

    In the stock market, what is an EBITA?

    Several things are taken into account when figuring out a company’s net profit. These include investment income and expenses, loan interest, taxes, depreciation, etc. But they don’t show directly how successful a company is. People who buy a lot of shares in a company can use the EBITA metric to decide whether or not to invest if the company consistently does well. This means that the share price may go up because the company’s future looks good.

  • What Are GARP Stocks?

    No single investment strategy is perfect. No single investment strategy is the “end-all, be-all” answer to all of your needs. Because of this, investors often mix and match two or more investment strategies to find a combination that works for them.

    This mix gives the investor a benefit in one of two ways. First, it can be done by combining the good things about the different strategies so that the good things outweigh the bad things. In a second way, one or both of the strategies that make up the combination cancel out the problems of the other strategy.

    One way to invest in more than one type of stock is called GARP. Growth at a fair price is what GARP stands for. GARP is an investment strategy that combines Value Investing and Growth Investing to give an investor “the best of both worlds”.

    So, to understand the GARP strategy better, we must first learn about Value Investing and Growth Investing. So let’s get down to business.

    Value Investing

    Value investing is like getting a good deal when you shop.

    Let’s say you go out to buy something, anything. You can buy a low-quality product for a low price, or you can buy a well-made product that is more expensive than the low-quality product but less expensive than the regular market price of the good. Which one do you want?

    Clearly, the second one is the winner. Yes, it would cost more than the low-quality product, but the fact that it would be better and cost less than usual makes up for the price difference.

    Well, value investing is when you buy shares in companies that are strong at their core, which means they run their business well. Share prices that are higher than, say, penny stocks are a natural result of this performance. Because of this, you buy these shares when their prices are lower than what they should be. As the market straightens out, the share price will rise to what it should be, and the investor will enjoy capital appreciation.

    Value investing usually involves buying shares of companies that have been around for a long time and have a strong position in the market because of how they do business.

    The idea behind value investing is also that the efficient market hypothesis is not true. This means that shares can be overvalued or undervalued because their prices don’t reflect all the market conditions and facts that affect their prices.

    Value investors try to figure out what a share’s fair value or “intrinsic value” is. An investor can use a number of different fundamental analytics, but Price to Book (P/B) Ratio, Price to Earnings (P/E) Ratio, and Free Cash Flow are some of the most common ones.

    Growth Investing

    Growth investing is a way to make money by letting the value of your investments go up. This capital growth happens because the company, whose shares are called “growth stocks,” has new technology and services that help the business run.

    Access to newer technology and services gives the business an edge, which means it can make more money than its competitors in the industry or even in the market as a whole. Most of the time, the extra money doesn’t go to the shareholders. Instead, it goes back into the company’s capital to give it more resources to use the better technology and services.

    There are two main ways in which growth investing is different from value investing. First, growth stocks usually belong to new companies that have a lot of room to grow because they are in markets that haven’t been fully explored yet. Because of this, these stocks are a riskier bet than those that are based on value.

    Another difference is that growth stocks are often overvalued because of their high demand, which comes from the fact that they have a higher chance of making money. When it comes to investing in stocks for growth, investors pay attention to five key things about the stock in question. These are the company’s past and future earnings growth, its profit margins, its return on equity, and the performance of its stock price.

    Investing in GARP

    GARP stocks are mostly growth stocks that have been put through some value investment stock filters.

    This means that investors are looking for stocks with high growth rates to add to their portfolios. The price of the share affects how value investing affects how stocks are chosen. This means that a GARP stock is a growth stock that is undervalued.

    GARP investing doesn’t have any rules about what metrics investors should look for when buying shares of a company. The Price/Earnings to Growth (PEG) ratio is an important metric for this strategy. If the ratio is less than 1, the price is in line with the growth of the business and not too high, like with growth stocks.

    Filtered Goodness

    As was already said, no investment plan is perfect. So investors shouldn’t put any of the above strategies on a pedestal that is too high. The GARP investing strategy is a mix of ideas that has become popular because it works better than other mixes. This doesn’t mean that any of the less popular strategies are less useful or that GARP isn’t a good filter.

    So, investors should always do their homework and use or ignore pre-made strategies based on their goals, risk tolerance, time horizons, and many other factors. Do you use any combinations of investing styles or strategies that have worked well for you?