Tag: Finance

What is Pecking Order Theory (POT)?

Pecking Order Theory, introduced by Donaldson in 1961 and later formalized by Myers and Majluf (1984), explains how…
What is Efficient Market Hypothesis (EMH)?

The Efficient Market Hypothesis (EMH) is a foundational theory in financial economics that posits that financial markets are…
What is Modern Portfolio Theory (MPT)?

Modern Portfolio Theory (MPT), introduced by economist Harry Markowitz in 1952, revolutionized the way investors approach asset allocation…
What is Internal Rate of Return (IRR)?

Internal Rate of Return (IRR) is a financial metric used in capital budgeting to evaluate the profitability of…
What is Net Present Value (NPV)?

Net Present Value (NPV) is a fundamental financial metric used in capital budgeting to evaluate the profitability of…
What is Capital Asset Pricing Model (CAPM)?

The Capital Asset Pricing Model (CAPM) is a foundational financial theory that explains the relationship between risk and…
What is Return on Investment (ROI)?

Return on Investment (ROI) is a financial metric used to evaluate the profitability and efficiency of an investment.…
What is Risk Management Theory?

Risk Management Theory is a strategic framework that helps businesses identify, assess, and mitigate uncertainties that could impact…
What is Dividend Irrelevance Theory?

Dividend Irrelevance Theory, proposed by Merton Miller and Franco Modigliani in 1961, argues that a company’s dividend policy…
What is Free Cash Flow?

Free Cash Flow (FCF) is a critical financial metric that measures the cash a company generates after accounting…