Category: Concepts
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What Is A Term Life Insurance Policy
A Term Life Insurance Policy also known simply as a ‘Term Policy’ is a pure insurance policy with no investment component. The entire premium collected under a term life insurance policy goes towards securing the life of the policyholder. This is known as risk premium. Under a term insurance policy, the sum assured is payable…
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How Do Central Banks Control Inflation?
Inflation is the gradual increase in the price of goods and services over a period of time. A high level of inflation is considered undesirable for the economy. An increase in price without any corresponding increase in income – reduces the purchasing power of Individuals and adversely affects their standard of living. As individuals have…
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What Is EBITDA Margin?
EBITDA stands for Earnings Before Interest, Taxes, Depreciation and Amortisation. It is a measure of the operating income of a firm before providing for interest expenses, taxes and depreciation or amortisation charges. EBITDA Margin is the measure of a company’s EBITDA as a percentage of its revenue. It is calculated as follows: EBITDA Margin =…
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What Are REITs And How Do They Differ From Mutual Funds
Real Estate Investment Vehicles or REITs are investment entities that pool funds from a number of investors and invest the proceeds to acquire commercial real estate properties that generate both rental income as well as appreciate in value over time. The investors are assigned units in the REIT proportionate to the amount of capital invested…
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What Are The Rules Related To Copyright Expiry in India?
A copyright grants protection to the author/creator of an original work by preventing the copy/republication of such works without his or her consent. According to Nishith Desai Associates, a copyright grants protection to the creator and his representatives for the works and prevents such works from being copied or reproduced without his/ their consent. The creator…
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What Are Unit Linked Insurance Plans [ULIPs]
Unit Linked Insurance Plans are Hybrid Insurance Products offered by Life Insurance Companies that attempts to cater to both the ‘Protection’ as well as ‘Investment’ needs of an individual. In Unit Linked Plans, the corpus (after deducting the necessary mortality and allocation charges) is invested into the capital markets (both fixed income as well as…
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How To Make Money By Trading In Futures Contracts?
In an earlier post I had covered in some detail the concept of futures. In this post I will discuss how you can make money by trading in futures. Before we proceed a recap, of the distinguishing characteristics of a futures contract would help: Futures are contracts to buy and sell a “standardized quantity” of a…
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What Are Futures Contracts?
Future Contracts or futures, are exchange-traded contracts between two parties to buy and sell a standardized quantity of a particular asset (the underlying), on a given ‘future’ date, at a pre-determined price. Futures are derivative products, similar in many aspects to a forward contract; but, with a few distinguishing characteristics. For a better understanding…
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Forward Contracts – Concept And Example
Forwards are the simplest form of a derivative contract. We can define a forward contract as an agreement between two parties to exchange a specific asset on a specified future date at a predetermined price (forward price). Both the delivery and the payment is made on the specified future date. The concept of forward contracts…
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Regulatory Agencies In India And Their Functions
The following is a list of regulatory agencies operational in India and their functions: Security Market: Regulator: Securities and Exchange Board of India To protect the interests of investors in securities and to promote the development of, and to regulate the securities market and for matters connected therewith or incidental thereto. Insurance Industry: Regulator: Insurance Regulatory and Development Authority…
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The Concept of Share Volume and Share Turnover [With Example]
Share volume and share turnover are important measures of liquidity in the stock markets. Let us attempt to understand the meaning of the two in some detail. Share Volume: Share volume is a measure of the total number of shares traded over a period of time. To compute the daily volume in respect of a…
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What Are Exchange Traded Funds (ETF)
Exchange Traded Funds (ETF) are securities that track the performance of a commodity (e.g Gold ETF) or an Index (broad-market like the NIFTY or sectoral like the Bank NIFTY) and are traded on a stock exchange. For example, an Exchange Traded Fund might try to replicate the performance of the NIFTY, by investing in all…