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What are Interest Rate Options?
Interest rate options are financial derivative contracts that enable investors to speculate or hedge against directional changes in interest rates. Interest rate options can be exercised at the strike price of the contract which is a pre-determined rate of Interest. Interest rate options are cash settled. As with equity options, an interest rate…
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What is a Forward Rate Agreement (FRA)
A Forward Rate Agreement (FRA) is a financial contract between two parties to exchange interest payments on a `notional principal’ amount on a pre-determined settlement date, for the duration of the contract. In conventional forward rate agreements, two parties swap a fixed interest rate for a variable one. The borrower is the…
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What is a Mortgage-Backed Security (MBS)?
A mortgage-backed security (MBS) is an financial instrument that is similar to a bond and is composed of a collection of mortgage loans that have been acquired from the banks that issued them and sold as a ‘bundle’ to individual investors. The investors of MBS earn periodic interest payments on these instruments…
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What is a Credit Default Swap (CDS)?
A credit default swap (CDS) is a type of credit derivative instrument that protects a buyer from default and other risks associated with debt instruments held by him. Until the credit maturity date, the buyer of a CDS has to pay to the seller a premium on a regular basis. In exchange,…
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What are Currency Futures Contracts?
A currency futures contract, commonly referred to as an FX futures, is an agreement to exchange one currency for another at a specified future date for an agreed price (exchange rate) that is set at the time of entering into the contract. Although currency futures contracts and currency forwards have many similarities,…
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Timeless Lessons in Investing from Warren Buffet’s Annual Shareholder Letters
Warren Buffet, chairman of Berkshire Hathaway Inc, is widely regarded as one of the greatest investors of all time. This post ,is a collection of some timeless lessons in investing, in his own words, shared by Buffet in his annual letters to shareholders of Berkshire Hathaway Inc. Read on! In investing, outstanding…
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How to Invest in Equities when Interest Rates are rising?
Recently, the world has been grappling with effects of Inflation. In my previous post we had discussed in some detail, the problem of inflation and the reasons behind the recent increase in interest rates across a majority of economies round the world; including India. Some of our learnings from the post are…
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Why are Interest Rates Rising and what it means in the Indian Context?
We know that when there is abundance of something, its price falls. The reverse happens in case of scarcity, when the price tends to increase. This is simple #Economics101. Now, think of money like any other commodity. If you need some money now and your savings fall short, you can always borrow…
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Should Retail Investors Invest in Earlystage Startups?
Investing in early stage startups might seem a rosy proposition for many retail investors with its lure of multibagger returns. There are however, significant risks factors associated with investing in startups which you as a small investor should be aware of. In this post, we will decode some of the risks and…
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How Does PharmEasy Make Money? PharmEasy Revenue Model
PharmEasy is one of India’s leading online pharmacy and healthcare platform. It enables users to order pharmaceutical and other healthcare products or services online. The PharmEasy Brand is owned by API Holdings Limited. In this post we will discuss the revenue model of PharmEasy. The PharmEasy Business Model. PharmEasy is a platform…
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How to Set up an eCommerce Store in India
Setting up an eCommerce store in India is easier than you think. With the right tools in hand, you can turn your dream of setting up a direct-to-consumer (D2C) eCommerce store into reality. The purpose of this post is to give you an overview of the right tools – to help you…
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How to Diversify your Stock Portfolio
Diversifying your stock portfolio by investing in a collection of stocks might be an effective way of reducing the risks associated with investing in stocks. So before we dive further into this discussion about using diversification as a tool to manage your portfolio risk, let us try and understand first what ‘risk’…
