Capital, Collateral, And Much More!!

Welcome to phase 2 of my online course titled Understanding the Stock Market.

I really appreciate you making the decision to invest into your growth and understanding of the stock market.

However, this course is not the only benefit you get from purchasing my course because I am owner and CEO of a company I created called Speakwithlarry I'm also giving you what I like to refer to as the blueprint to setting up the foundation of your own online business.

As you're creating your content and gaining knowledge about your own particular subject following my process will also allow you to create your own online course which will in turn allow you to generate a profit from your creation.

So with that being said I want to introduce you to my first segment of this course titled, Capital, Collateral, And Much More!

Clicking on the link will allow you to watch the video that comes with the text.

What Is Capital?

Capital is a broad term that can describe any thing that confers value or benefit to its owner, such as a factory and its machinery, intellectual property like patents, or the financial assets of a business or an individual. 

While money itself may be construed as capital, capital is more often associated with cash that is being put to work for productive or investment purposes.

In general, capital is a critical component of running a business from day to day and financing its future growth. 

Business capital may derive from the operations of the business or be raised from debt or equity financing. 

When budgeting, businesses of all kinds typically focus on three types of capital: working capital, equity capital, and debt capital. 

A business in the financial industry identifies trading capital as a fourth component.

---What Is a Financial Asset?

A financial asset is a liquid asset that gets its value from a contractual right or ownership claim. 

Cash, stocks, bonds, mutual funds, and bank deposits are all are examples of financial assets. 

Unlike land, property, commodities, or other tangible physical assets, financial assets do not necessarily have inherent physical worth or even a physical form. 

Rather, their value reflects factors of supply and demand in the marketplace in which they trade, as well as the degree of risk they carry.

---What Is Capitalism?

Capitalism is an economic system in which private individuals or businesses own capital goods. 

The production of goods and services is based on supply and demand in the general market—known as a market economy—rather than through central planning—known as a planned economy or command economy.

The purest form of capitalism is free market or laissez-faire capitalism. Here, private individuals are unrestrained. 

They may determine where to invest, what to produce or sell, and at which prices to exchange goods and services. 

The laissez-faire marketplace operates without checks or controls.

Today, most countries practice a mixed capitalist system that includes some degree of government regulation of business and ownership of select industries.

---What Are Capital Expenditures (CapEx)?

Capital expenditures (CapEx) are funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, technology, or equipment.

CapEx is often used to undertake new projects or investments by a company. 

Making capital expenditures on fixed assets can include repairing a roof, purchasing a piece of equipment, or building a new factory. 

This type of financial outlay is made by companies to increase the scope of their operations or add some economic benefit to the operation.

---What Is a Capital Investment?

Capital investment is the procurement of money by a company in order to further its business goals and objectives. 

The term can also refer to a company's acquisition of long-term assets such as real estate, manufacturing plants and machinery.

---What Is Collateral?

The term collateral refers to an asset that a lender accepts as security for a loan. 

Collateral may take the form of real estate or other kinds of assets, depending on the purpose of the loan. 

The collateral acts as a form of protection for the lender. 

That is, if the borrower defaults on their loan payments, the lender can seize the collateral and sell it to recoup some or all of its losses.

---What Is Compound Interest?

Compound interest (or compounding interest) is the interest on a loan or deposit calculated based on both the initial principal and the accumulated interest from previous periods.

Thought to have originated in 17th-century Italy, compound interest can be thought of as "interest on interest," and will make a sum grow at a faster rate than simple interest, which is calculated only on the principal amount.

The rate at which compound interest accrues depends on the frequency of compounding, such that the higher the number of compounding periods, the greater the compound interest. 

Thus, the amount of compound interest accrued on $100 compounded at 10% annually will be lower than that on $100 compounded at 5% semi-annually over the same time period. 

Since the interest-on-interest effect can generate increasingly positive returns based on the initial principal amount, it has sometimes been referred to as the "miracle of compound interest."

---What Is Simple Interest?

Simple interest is a quick and easy method of calculating the interest charge on a loan.

Simple interest is determined by multiplying the daily interest rate by the principal by the number of days that elapse between payments.

This type of interest usually applies to automobile loans or short-term loans, although some mortgages use this calculation method.

---What Is Correlation?

Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. 

Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.

---What Is Portfolio Management?

Portfolio management is the art and science of selecting and overseeing a group of investments that meet the long-term financial objectives and risk tolerance of a client, a company, or an institution.

Portfolio management requires the ability to weigh strengths and weaknesses, opportunities and threats across the full spectrum of investments. 

The choices involve trade-offs, from debt versus equity to domestic versus international and growth versus safety.

Professional licensed portfolio managers work on behalf of clients, while individuals may choose to build and manage their own portfolios. 

In either case, the portfolio manager's ultimate goal is to maximize the investments' expected return within an appropriate level of risk exposure.

Portfolio management may be either passive or active in nature.

---What Is the Current Ratio?

The current ratio is a liquidity ratio that measures a company's ability to pay short-term obligations or those due within one year. 

It tells investors and analysts how a company can maximize the current assets on its balance sheet to satisfy its current debt and other payables.

A current ratio that is in line with the industry average or slightly higher is generally considered acceptable. 

A current ratio that is lower than the industry average may indicate a higher risk of distress or default. 

Similarly, if a company has a very high current ratio compared to their peer group, it indicates that management may not be using their assets efficiently.

The current ratio is called “current” because, unlike some other liquidity ratios, it incorporates all current assets and current liabilities. 

The current ratio is sometimes called the working capital ratio.