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We are going to turn our attention on MBA Mondays to some costs that are important to recognize in business. First up is Opportunity Cost.

Opportunity Cost is the cost of not being able to do something because you are doing something else. These costs don’t end up on your income statement but they are expensive, particularly in…

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Continuing the international theme, we are going to talk about Purchasing Power Parity today on MBA Mondays. I learned about purchasing power parity in business school and it has always helped think about international exchange rates. The theory is far from perfect and fails miserably in many situations, but I still think the basic construct of purchasing…

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I’m in europe this week, using euros for everything instead of dollars. So I thought it would be an appropriate time to talk about currency risk in a business.

When you have a business that only generates revenues in your local currency, you don’t have to concern yourself with the fluctuations of one currency versus another. But if you start…

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This is the third in a series of MBA Mondays posts about risk and return. Last week we talked about diversification, my favorite form of risk mitigation. This week we are going to talk about another favorite risk mitigation method of mine – hedging.

There are different types of investors in any highly developed and liquid market. There…

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I was talking to a friend over the weekend and he told me a story about a person he knows who made hundreds of millions of dollars of net worth in his career and then lost it all. I asked my friend how that could happen. He said “he made a lot of risky bets and none of them worked out.”

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One of the most fundamental concepts in finance is that risk and return are correlated. We touched on this a tiny bit in one of the early MBA Mondays posts. But I’d like to dig a bit deeper on this concept today.

Here’s a chart I found on the Internet (where else?) that shows a…

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This is the final post in a long MBA Mondays series on projections, budgets, and forecasts. Today we will talk about what happens when reality starts to differ from what you’ve budgeted – you re-forecast.

Let’s go back to the framework I laid out at the start of this series. Projections are long-term high level efforts to establish…

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Last week we talked about budgeting in a growing company. I defined that as a company between 50 and 100 employees. Today we are going to wrap up the budgeting series by talking about what happens to the process when you get to be a “big company.” The context for the whole of this MBA Mondays series…

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I failed to post a MBA Mondays post last monday. Sorry about that. I had something else on my mind when I woke up, wrote about that, and didn’t realize that it was monday and I was supposed to do an MBA Mondays post until late in the afternoon.

So we are now picking up from where we…

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Today and for the next two weeks, we are going to talk about budgeting on MBA Mondays. Since the budgeting process works differently in companies of various sizes, we are going to focus on three company sizes; 10 people, 75 people, and 150 people. Today we will talk about the 10 person company scenario.

As I said in…

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