Capital Base
The term "capital base" has various connotations in the finance world, but, in general, it refers to a base level of funding. For those companies who just went public in an initial public offering, for example, the capital base is the money acquired from the offering, plus any accumulated earnings made through regular sales.
Banks provide a particularly nuanced case. For banks, their capital base is their assets minus their liabilities. Simple enough. They are required to keep a certain amount of capital on hand in order to make loans and service their customers.
But sometimes the value of the collateral backing up a bank's loans goes down, threatening the amount of the capital base. For example, the value of local real estate may have tanked or interest rates may have gone way up. As a result, the amount being paid back on loans is less than the amount the bank needs. The bank will have to raise funds by issuing bonds, reducing expenses or increasing their assets.
"Capital base" also refers to opening an account in a brokerage firm. Your capital base is the money you put into your account in order to purchase securities. Future contributions to the account add to your capital base (as does any profits you make on your investments).
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Finance: What is a Hard Asset?12 Views
Finance allah shmoop What is Ah hard asset Yeah It
takes a lot of hard work to get an asset
like that Okay So hard asset is just one that
you can bang on touch Engage with cell Alright examples
Oil it's Hard asset gold Hard of vintage nineteen Fifty
seven Ferrari with beige leather interior hard four thousand head
of longhorn cattle in texas A commercial building in the
best part of town All of these arm or less
commodities Hard assets Well okay Okay The categories Rare cars
art coins stamps stuff like that that's where they fit
So what do you care if something is ah hard
asset or a soft one Well most or all hard
assets are commodities and they generally do very well in
periods of very high inflation when you know stocks were
getting crushed And yeah the feds raising rates appoint a
quarter now forever Well equities and bonds will get crushed
Commodities well generally keep up with the spike in prices
causing the fed raised rates in the first place So
they're a good hedge for most investment portfolios And not
all of them are great forever like check out riel
Inflation adjusted oil prices the last few decades you had
not a good run Most not all do well though
an oil will likely have its day in the sun
again At some point you lan When in doubt remember
what kim kardashian and warren buffett said A good asset
is hard to find and a hard asset is good
to find But we won't tell you who said which
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