Category: Concepts

CAGR or the Compounded Annual Growth Rate measures the annualized return on an investment spread over a period exceeding one year.  Suppose you invest Rs. 100 into equities at the beginning of year 1 and the investment grows to Rs. 150 at the end of year 3. The investment has therefore earned you a return…

A traditional bank offers services that can be broadly categorized into three groups: acceptance of demand and time deposits from the public, extension of credit facilities to borrowers and payments and remittance services. A payments bank, as differentiated from a traditional bank, will offer only certain restricted banking services to its customers. A payments bank…

This post features a collection of 21 important legal terms and their meanings. After all its always good to know more. 1. Ad hoc – For this (purpose). 2. Ad interim – In the meantime. 3. Ad valorem – According to the estimated value. 4. Affidavit – A written statement made voluntarily under an oath…

Risk is a possibility that a plan might fail or a situation goes against us. All of us face risks in our day to day lives. For a person commuting to work, the risk is that he might be caught up in a traffic and be late for office. For an investor the risk is…

Repurchase Options or Repos are a mechanism through which the Reserve Bank Of India infuses liquidity into the banking system by lending money to the banking institutions. Repos are backed by a collateral – which generally takes the form of approved debt securities. A Reverse repo is similar to a repo transaction, however, in this…

A rolling settlement cycle is one in which trades executed on the trade date (T) are settled ‘X’ no. of days after. A rolling settlement is denoted in terms of ‘T+X’ days, where the settlement will take place ‘X’ business days after the Trade Date. In the Indian equity markets, we follow a T+2 settlement…

Arbitrage is the practice of taking advantage of the ‘price-difference’ for a homogeneous commodity or a security in two or more markets by buying from the market where the price is low and simultaneously selling it in the market where the price is high.  Arbitrage is possible only when the profits made by buying and…

ISIN stands for International Securities Identification Number and is a 12 digit alpha-numeric code used to uniquely identify a tradable security (Shares, bonds, warrants etc). ISIN is generally used for identification of a security during the trading and settlement process. Understanding the ISIN code. An ISIN consists of a two letter country code, a nine-digit alpha-numeric…

Unit Linked Insurance Plans (ULIPs) are hybrid life insurance products that seem to be growing in popularity by the day. These are market linked products where the returns to the investors are directly related to the performance of the funds they invest in. In this post we take up 5 facts about these smart life…

Crowdfunding is the art of financing a project or venture by pooling together small contributions from a large number of individuals, ideally through an online platform. People use crowdfunding to finance all kinds of ventures and activities: make a film, launch a tech startup or simply raise money for a social cause. Crowdfunding initiatives work…

Stock indices like the NIFTY and the SENSEX are price indices – meaning that they capture only the changes in prices of the constituent scrips. Thus if you own the same stocks that constitute the NIFTY (and in the same weightage), the returns from your portfolio over a given period of time (considering only capital…

Market makers are market participants entrusted with the task of infusing liquidity into the market structure by providing two-way (both buy and sell) quotes for all scrips they act as market makers to. By proving 2-way quotes, the market makers stand ready to buy from and sell to investors willing to transact in a given…