The Cost of Debt
The cost of debt is the rate at which a company can borrow long-term today. It will reflect the firm’s default risk and the level of interest rates in the market. It is the sum of the risk-free rate and …
Trading Systems
Create Price Database Using SQLAlchemy & Python
Learn how to create a price database for crypto, forex, futures, and stocks in PostgreSQL using Python and SQLAlchemy. You should already know how to connect to a PostgreSQL Database Using SQLAlchemy), and you can download the code for this …
How to Create an Equities Database
When researching what works in the markets, you’ll want to store your data in a database. There are many reasons why, but the two primary purposes are data persistence and flexibility. I’m going to show you how to create your …
The Cost of Equity
The cost of equity is the return demanded for an individual equity. It’s the return needed for investors to compensate for equity risk, and it’s the cost of equity funding for the company. The cost of equity is relatively easy …
What Is Shareholders’ Equity?
Equity, also called shareholders’ equity or stakeholder equity, gives the holder proportional rights to the remaining cash flows after all debts have been paid. The value of equity depends on your perspective and has both a historical value and an …
Beta & Relative Risk
We can add the risk-free rate and the equity risk premium to determine how much the market, or an average risk stock, will return. But what if our stock is more or less risky than the market? For that, we …
The Equity Risk Premium
The Equity Risk Premium is the premium investors charge for investing in the average risk equity over and above a risk-free investment. The ERP is a dynamic number that varies over time due to changes in growth, inflation, and risk. What …
The Risk-Free Rate
The risk-free rate is a foundational element of investing. It’s the theoretical rate of return you can get investing in something that is guaranteed and has no risk. It’s a reference point in investing as it makes sense to understand …
How to Value a Company: A Complete Guide
The value of a business is equal to the amount of cash you can take out of it for the rest of its life, discounted to the present. Learning how to value a company is just like riding a bike. …
How to Read Financial Statements Mini-Course
Before you can value a company, you have to understand the numbers. This guide is an attempt to be the resource I wish I had when first starting to read financial statements. This mini-course is not designed to be a …