Introduction to liquidity ‘Liquidity’ – In simple terms of business, economics or investment, market liquidity is an asset’s ability which is to be sold without causing a significant movement in the price. It has the ability which causes minimum loss of value. It can also be stated as the business’s ability to catch payment obligations, in terms of processing sufficient liquid assets. So, we have three different instances to understand liquidity: General definition – The ease with which an asset can be converted to cash (It defines the liquidity of that asset). Accounting – The ability of current assets of a business, to meet the current … Continue reading What is liquidity?
RBI (Reserve Bank of India) announced swerve measures to curb the Rupee fall against the Greenback. The term Green back comes from the U.S. which refers to the legal tender. An overview of measures taken by RBI: Raising cost of borrowing by banks by 2 per cent to 10.25 per cent Announcing sale of bonds worth Rs 12,000 crore through open market operations to suck liquidity from the market Hiked the lending rates for banks Why did RBI take such steps? To check the rupee slid, which went down to as low as 61.21 against dollar last month To curb excessive volatility … Continue reading RBI measures to curb rupee depreciation
Marginal Standing Facility Rate (MSF) – The rate at which the scheduled banks could borrow funds from the RBI overnight, against the approved government securities is termed as MSF. Reserve Bank of India in its monetary policy (2011-12) has defined the term Marginal Standing Facility rate as the one, under which scheduled banks could borrow up to 1 % of their respective Net Demand and time Liabilities funds overnight from the Reserve Bank of India (RBI) against approved government securities. Introduction: RBI announced the introduction of MSF on May 3, 2011 but it was effectuated from May 9, 2011. The … Continue reading What is Marginal Standing Facility Rate?
Ad Valorem term means that “according to value” and this can be applied to any of the tax, fee, custom duty which is charged on the percentage basis of cost of products, services or property. Ad Valorem tax can be property tax or even duty on imported items or commodities, in concern with the property. It can be explained as a tax based on assessed value of real estate/personal property. This tax can be explained in terms of investopedia as- Consider the case of municipal property taxes, property owner’s property have their property assessed on sporadically basis by … Continue reading What is Ad Valorem Tax?
National Payment Corporation of India (NPCI) has finalized the decision to launch Unique India Card RuPay which is the alternative of global real time processing firms like Master card and Visa. This significant move will provide convenience to the customers as they can use RuPay instead of Master card and Visa and there are multiple websites such as Future group’s online venture which now provide Rupay option for payments. Some of the online payment firm like CCAvenue may be one of the first authorized companies by NPCI which can process Rupay debit cards. This Rupay debit card is issued to the … Continue reading Domestic alternative to MasterCard and Visa – RuPay
Cost Benefit Ratio is the ratio of the benefits from a project to its cost in monetary terms. It is a common term used in cost benefit analysis, which is nothing but an analysis of a project in terms of costs incurred and benefits realized. Or, value of money for any project or proposal and this applies not only in analyzing big corporate projects but in our daily and day to day life as well. Let’s Understand this with Simple example:- You went to buy a T.V. set in a shop and at the same time, the same T.V. set … Continue reading What is cost benefit ratio?
IDR stands for the Indian Depository Receipts. IDR is a financial instrument through which a foreign company can raise funds for itself from Indian securities markets. These receipts are issued against the underlying equity of the Issuing Company. The foreign Companies deposit shares with Indian depository and in exchange of it the Indian depository will issue receipts to the investors for the money which they have invested. Standard Chartered PLC was the first company to issue IDRs. They raised around INR 2490 crore by selling 24 crore IDR’s. Continue reading What is IDR?
LIBOR stands for London Inter Bank Offered Rate. It is the rate of interset on short term loans in London money market. So, other banks can borrow from the London interbank market at this specified rate. LIBOR is the basis on which the interest rate of most of international borrowings by corporate and countries is fixed. Important Facts: LIBOR was first used : 1986 Number of international banks involved in deciding the rate: 16 member banks Continue reading What is LIBOR?
The word “bull market” is used when there is a positive trend in the market and investors are expecting that the market will rise in near future. In other words bull market is nothing but investors expectations and usually this terminology is used in stock market but also used where trade is involved. What is bear market? On the other side bear market is nothing but opposite of bull market when the investors are expecting the markets to fall from their current level, it is said to be that the market is bearish. Bull and Bear Market are nothing but … Continue reading What is meant by bull market?
Let’s talk about “futures contract” with an example: Suppose a farmer produces barley. He is expecting to have an excellent yield on barley, but he is worried. He is concerned about the future prices of barley. The farmer fears the fall in the barley prices in the future. How can he protect himself from the potential of falling prices of barley? Now, suppose the farmer supplies barley to a breakfast cereal manufacturer. The farmer can reduce his risk exposure and worries if he could lock in the barley price today. He can do so by entering into a contract today … Continue reading What are futures contract?