Mutual Funds

The most prevalent and well-known type of mutual fund operates on an open-ended basis. This means that it continually issues (sells) shares on demand to new investors and existing shareholders who are buying. It redeems (buys back) shares from shareholders who are selling.

Mutual fund shares are bought and sold on the basis of a fund’s net asset value (NAV). Unlike a stock price, which changes constantly according to the forces of supply and demand, NAV is determined by the daily closing value of the underlying securities in a fund’s portfolio (total net assets) on a per share basis.

Net asset value (NAV) represents a fund’s per share market value. This is the price at which investors buy (“bid price”) fund shares from a fund company and sell them (“redemption price”) to a fund company. It is derived by dividing the total value of all the cash and securities in a fund’s portfolio, less any liabilities, by the number of shares outstanding. An NAV computation is undertaken once at the end of each trading day based on the closing market prices of the portfolio’s securities.

For example, if a fund has assets of $50 million and liabilities of $10 million, it would have a NAV of $40 million.

This number is important to investors, because it is from NAV that the price per unit of a fund is calculated. By dividing the NAV of a fund by the number of outstanding units, you are left with the price per unit. In our example, if the fund had 4 million shares outstanding, the price-per-share value would be $40 million divided by 4 million, which equals $10.

This pricing system for the trading of shares in a mutual fund differs significantly from that of common stock issued by a company listed on a stock exchange. In this instance, a company issues a finite number of shares through an initial public offering (IPO), and possibly subsequent additional offerings, which then trade in the secondary market. In this market, stock prices are set by market forces of supply and demand. The pricing system for stocks is based solely on market sentiment.

Because mutual funds distribute virtually all their income and realized capital gains to fund shareholders, a mutual fund’s NAV is relatively unimportant in gauging a fund’s performance, which is best judged by its total return.

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Foundation

What’s Foundation?
Foundation is the first and most advanced responsive front-end framework in the world. It lets you quickly prototype and create sites and apps that work on any device (smartphones up through desktops and TV displays) with a library of tested components.

Foundation doesn’t require any particular back end. In fact, Foundation has been used with dozens of back-end and CMS technologies, and Foundation is used by hundreds of thousands of sites every day to deliver rock-solid responsive sites.

Foundation is Mobile First

Mobile First is two parts technology and two parts philosophy. Foundation is built in such a way that it encourages a mobile-first approach, designing your site or app for the small device first, then expanding that to include larger displays and more full-featured devices. While it’s not required, building this way in Foundation is relatively simple and introduces really useful constraints in product design. We’ve found it to be a big win in designing effective, ubiquitously available products.

What technology is used in Foundation?

Foundation is built with HTML, CSS and Javascript, the core components of the Web. While Foundation is fairly cutting-edge, we use bulletproof technology like jQuery, HTML5 Boilerplate and Normalizr as our baseline. We then layer on top components and plugins designed to work well in all of our supported browsers and devices.

Since Foundation only uses front-end technology, it has no incompatibilities with back-end or server technology and has been used with everything from WordPress and Drupal to .Net.

Cost-benefit analysis

Cost-benefit analysis (CBA) is a method used to make business and economic-based decisions. CBA can be used to judge a single option, or compare two or more options to select the most optimal alternative.

CBA consists of estimating all the costs of a particular decision, then comparing them to the estimated benefits of that decision. CBA is not exclusive to business, as governments use it to evaluate different policy choices.

For instance, ABC, Inc. plans to build a new production facility. A CBA will consider the cost to build the new project against the benefits of added productivity from a modern plant. The CBA might also include other benefits such as an increase in employee morale.

IRR NPV and Discount Rate

IRR:

Internal rate of return is a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

One popular use of IRR is in comparing the profitability of establishing new operations with that of expanding old ones.For example, an energy company may use IRR in deciding whether to open a new power plant or to renovate and expand a previously existing one. While both projects are likely to add value to the company, it is likely that one will be the more logical decision as prescribed by IRR.Any project with an IRR that exceeds the RRR will likely be deemed a profitable one, although companies will not necessarily pursue a project on this basis alone. Rather, they will likely pursue projects with the highest difference between IRR and RRR, as chances are these will be the most profitable.
NPV :  Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows. NPV is used in capital budgeting to analyze the profitability of a projected investment or project.

interesting reference:
http://www.mathsisfun.com/money/net-present-value.html

The following is the formula for calculating NPV:

Net Present Value (NPV)

where

Ct = net cash inflow during the period t

C= total initial investment costs

r = discount rate, and

t = number of time periods

A positive net present value indicates that the projected earnings generated by a project or investment (in present dollars) exceeds the anticipated costs (also in present dollars). Generally, an investment with a positive NPV will be a profitable one and one with a negative NPV will result in a net loss. This concept is the basis for the Net Present Value Rule, which dictates that the only investments that should be made are those with positive NPV values.

Discount Rate:
The interest rate charged to commercial banks and other depository institutions for loans received from the Federal Reserve Bank’s discount window. The discount rate also refers to the interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows. The discount rate in DCF analysis takes into account not just the time value of money, but also the risk or uncertainty of future cash flows; the greater the uncertainty of future cash flows, the higher the discount rate. A third meaning of the term “discount rate” is the rate used by pension plans and insurance companies for discounting their liabilities.

Overall

A similar issue arises when using IRR to compare projects of different lengths. For example, a project of a short duration may have a high IRR, making it appear to be an excellent investment, but may also have a low NPV. Conversely, a longer project may have a low IRR, earning returns slowly and steadily, but may add a large amount of value to the company over time.