Understanding business finance is a must for entrepreneurs who want to start a business, stay in business and grow big.
In addition to perusing these business finance articles, you may also be interested in our articles that focus exclusively on raising money for a business venture.
- Investment Strategies Part I: Call Options - Although many alternatives exist with securities, call and put options offer a variety of opportunities for firms to realize returns while minimizing the amount of risk involved. This article introduces the hedging instrument of call options.
- Accredited Investors - Before accepting a check from an investor, you may want to make sure they are an accredited investor. What's an accredited investor? Great question.
- Understanding Equity Transactions: Stock Contracts I - In order to understand the capitalization structure of a company, it is important to know what the different types of contracts are to purchase and sell stock of the company. This is the first of two articles on stock contracts.
- Poof IPOs - It sounds crazy but it's done many times. Get a bunch of companies to agree to be acquired by you, contingent on your going public and raising money to pay off the acquired company owners. It's called a Poof IPO and it's a novel business finance concept that has been used to make something out of nothing.
- Agricultural Commodity Futures - Small businesses that operate in the agricultural industry must understand how agricultural commodity futures work. In this business finance article, we offer a primer for understanding commodities futures.
- Investment Strategies: Butterfly Spreads - Although an endless amount of strategies using puts and calls exists, some combinations are more widely used than others for equity investments. Many popular methods for managing the riskiness of portfolios involve the use of spreads. One particular type of spread, called a butterfly spread, profits from the lack of volatility in a stock's price during a given period of time. This article will introduce the options strategy of butterfly spreads, how they are created, and how investors profit from their design.
- Investment Strategies: Covered Calls - The use of covered calls allows investors to profit from relatively stable stocks. This article introduces the hedging strategy of covered calls, how they are created, and how investors profit from their design.
- Investment Strategies: Straddles - Many equity investment strategies utilize both call and put options to decrease the amount of risk investors face with their investment portfolios. One such strategy involves straddles that use calls and puts to capitalize on volatile stock prices.
- The Venture Capital Method of Private Company Valuation - Valuation of private companies is a tricky task and not an exact science. In this article, we discuss a common method used by venture capitalists.
- Behavioral Finance - Are stock and security markets really efficient? How do they explain abnormalities like the technology bubble of the late 1990s to early 2000s? A new field called behavioral finance may offer an explanation.
- Investment Strategies: Strips and Straps - Different combinations of call and put options offer many strategies to investors that want to hedge the risk of their portfolios. Such strategies include strips and straps which are variations of the straddle technique discussed in a previous article.
- Understanding Equity Transactions: Stock Contracts II - This second article on stock contracts provides a more detailed explanation of investment strategies with option contracts.
- Phantom Stock and Stock Appreciation Rights - So you're an entrepreneur with a young company and you want to get your employees excited about the performance of the company but can't afford the cost of dilution associated with issuing options or restricted stock. Phantom stock and Stock Appreciation Rights can be a great way to overcome this obstacle.
- Efficient Market Hypothesis - The belief that markets are efficient is central to modern-day economic theory. As an entrepreneur, it's important that you are at least conversant in efficient market theories.
- Investment Strategies: Box Spreads - Through different combinations of call and put options, equity investors hedge particular risks associated with their investment portfolios. Money spreads allow investors to profit from certain movements of a stock's price while limiting their amount of exposure. One specific type of money spread involves box spreads which combine put and call options to earn risk-free profits. This article will introduce box spreads, how they are created, and how investors profit from their designs.
- Going Public Through a Reverse Merger - A Reverse Merger may be the quickest way to go public but is it the best? We look at a few drawbacks of using a reverse merger to take your company public.
- Understanding Warrants - You're talking to an investor and they are ready to invest at a valuation you like but they also want some warrants as part of the deal. You grin and wonder "What the heck is a warrant?" Avoid that hypothetical scenario -- read this article!
- Investment Strategies: Put Options - Many companies have excess cash or other assets on their balance sheets that must remain relatively liquid for their operations. A company could be preparing to make a large capital investment or participate in another strategic action in the near future. Whatever the reason, companies can benefit by investing their short-term or excess capital in securities. Although many alternatives exist with securities, call and put options offer a variety of opportunities for firms to realize returns while minimizing the amount of risk involved. This article introduces the hedging instrument known as put options.
- Investment Strategies: Protective Put - Protective puts which allows investors to limit the downside risk of their investment while maintaining the upside profit potential. This article introduces the hedging strategy of protective puts, how they are created, and how investors profit from their design.
- Investment Strategies: Bear Spreads - Equity investors are able to hedge certain risks involved in their portfolios through different arrangements of call and put options. Various strategies use spreads which involve the purchase and sale of options with either different exercise prices or expiration dates. One particular type of spread is a bear spread, a strategy which profits from decreases in a particular stock's value. This article introduces the option strategy of bear spreads, how they are created, and how investors profit from their designs.
- Investment Strategies: Bull Spreads - By combining call and put options in various ways, equity investors are able to hedge certain risks involved in their portfolios. Various strategies use spreads which involve the purchase and sale of options with either different exercise prices or expiration dates. One particular type of spread is a bull spread, a strategy which profits from increases in a particular stock price. This article introduces the option strategy of bull spreads, how they are created, and how investors profit from their designs.
- What You Should Know About Stock Options - Stock options are a widely used form of executive compensation, yet a lot of entrepreneurs don't fully understand how they work, when to use them, or the negative impact they can have on a firm. This article provide a brief description of stock options and what you should know about them.
- Understanding the Dow Jones Indexes - Have you heard news reports of the "Dow" rising or falling, and knew that it had something to do with the stock market, but wasn't completely sure of what the "Dow" was? Dow Jones & Company has created a number of indexes which track the financial performance of certain stocks since 1896. This article explains what the "Dow" is, and the role it plays in today's financial markets.
- Understanding the NASDAQ - Like the S&P 500 and the Dow Jones Industrial Average, the NASDAQ is often mentioned as an indicator of the health of the American economy. This article explains how the NASDAQ came into its current form and the role it plays in equity markets.
- Understanding the New York Stock Exchange - The New York Stock Exchange is the oldest and largest stock exchange in American history. This article explains how the New York Stock Exchange came into its current form and the role it plays in financial markets.
- Understanding the S&P 500 - Like the "Dow," the price of the S&P 500 is often mentioned on news reports when the stock market is discussed. What exactly does the S&P 500 represent, and what does it mean for business owners and entrepreneurs? This article outlines the historical significance of the S&P as well as its current role in financial markets.