Category: Concepts
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What is a Blockchain? What are Cryptocurrencies?
Cryptocurrencies are de-centralised digital currency token that are freely transferrable within its network of users. Cryptocurrencies in their current form, are regulated not by a central authority like a ‘Reserve bank’; but collectively by the network. The basic idea behind the creation of cryptocurrencies is to bring into existence a payment system that moves away…
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What Is Universal Basic Income?
Universal Basic Income is a welfare scheme under which the Government of a country provides to all its citizens, a minimum income that allows them to meet the basic necessities of life. This is a welfare scheme aimed at alleviating poverty by allowing every citizen of the country a minimum standard of living. Under the…
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Private Investment in Public Equity (PIPE)
A Private Investment in Public Equity (PIPE) is a transaction through which a listed entity raises capital by private placement of its securities with one or more investors; without going through the process of a secondary public offer. A Private Investment in Public Equity (PIPE) transaction allows a public company to raise capital quickly and…
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What is a Feeder Fund
A Feeder Fund is Mutual Fund that pools investment capital from various investors and then feeds (i.e invests) this capital pool into one or more Master Fund(s). It is the Master-Fund that undertakes the investment activity on behalf of the investors. In a Feeder-Master fund structure, the feeder fund is typically set up as a…
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What are Arbitrage Funds? How Do Arbitrage Funds Work?
Arbitrage funds are a category of Mutual Funds that are often overlooked by investors. To understand how arbitrage funds works, we must first understand the concept of arbitrage. Arbitrage is an investment strategy that looks to capitalize on the price difference of a single commodity or asset in two different markets. So, if the price…
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What is a Derivative Contract? Types and Example
A Derivative contact is a contract between two parties that derives its value from the value of another asset – known as the underlying. Thus, the value of the derivative contract is linked to the value of the underlying asset. Common underlying assets include stocks, bonds, indices (eg NIFTY), currencies or commodities like gold, silver,…
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What Is a Dead Cat Bounce?
The term dead cat bounce is associated with the stock or the securities market. A dead cat bounce refers to a situation where stock prices rally temporarily, in a bear market, before continuing the fall again. When the financial markets experience a prolonged fall in asset prices, we call it a bear market. A rally…
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What is the Difference between Interest Rate & Yield
A bond is an acknowledgement of debt issued by a borrower to a lender. Bonds are fixed income security i.e the bond holder is entitled to a fixed rate of interest (known as the coupon rate) on the amount of debt acknowledged on the face of the bond (the principal amount). Bonds are typically issued…
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Uniform Price Vs Multiple Price Auction
An Auction is a process of accepting bids through which a right, commodity or security is sold to the highest bidder. Auctions are held to sell everything ranging from antiques to financial securities. We encounter terms like Uniform Price Auction or Multiple Price Auction, generally, when it comes to the auction of a right or…
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What Is Contract Manufacturing?
Companies, with a business model which involves selling a product under their own brand name, have two options – either to manufacture the product themselves or to get the product (or a part of it) manufactured by someone else. When a company outsources the manufacturing of a product or a part of it to a…
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What is Social Capital?
In this post we discuss the concept of Social Capital. The term social capital is a combination of the two terms “social and “capital”. Further, the term social derives its inference from the term ‘society”. Therefore to understand the concept of social capital, we must first comprehend the meaning of the two terms “society” and…
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What Is A Cash Flow Statement?
A Cash Flow Statement is one of the most important documents that an investor must look into before investing in a company. A cash flow statement records the sources and the uses of cash (and cash equivalents) of a particular company over a period of time. Simply put, a cash flow statement basically tells us…