2 KiB
2 KiB
Section 8 | Lesson 44 - Debt/Bonds, Interest Rates/Yield Curves, Equity
Notes
late stage VC & VD round
- year 5-6
- best VC: Meritech
- best VD: Silicon Valley Bank
Finance & Accounting differences
accounting
- accrued revenue and expenses
finance
- cash revenue and expenses
- cost of capital (cost of getting money)
- cost of equity
Debt
- nominal interest rate = interest rate of a bank loan
- real interest rate: rate that government loans banks
- liquidity risk: how fast can one turn all his assets to cash
- cost of debt = liquidity risk + inflation risk + defautl risk + maturity + real interet rate
- risk free rate = real rate of interest + inflation premium
yield curve
- x axis: time
- y axis: interest
- you can plot on that curve what the interest rate is going to be longer term
calculate inflation
- bureau of labor statistics
- bls.gov
-
calculate how much stuff you bought in one year is worth at present
what is inflation
-
to raise interest rates the gov sells bonds
- banks buy bonds
- bonds say the gov will buy back the bond at a rate
-
this takes money out of circulation
- money is more scarce it is worth more
-
when they want to lower interest rates they buy bonds
- this puts more money in circulation
most important tool of government
- if gov cant control the price of bitcoin, it has less power
inflation has been negative at times
- so check out the CPI Inflation calculator
- https://data.bls.gov/cgi-bin/cpicalc.pl an-entire-mba-in-1-courseaward-winning-business-school-prof
basic needs to assess risks
- a mature cash rich company pays a lower debt