Finance is often defined
simply as the management of money or “funds” management.
FUND: fund is the process of
Funding,
or providing capital (funds) or other
resources
for a transaction, a project, a person, a business or other private or public
institutions
PORTFOLIO is a financial
term denoting a collection of investments held by an investment company,
hedge
fund, financial institution or individual.
PORTFOLIO MANAGEMENT is the management of the collection of
investments held by an investment company,
hedge
fund, financial institution or individual.
SHAREHOLDERS EQUITY: In an accounting context,
Shareholders'
equity (or stockholders' equity, shareholders' funds, shareholders' capital
or similar terms) represents the remaining interest in assets of a company,
spread among individual
shareholders of
common
or
preferred stock.
Investment is putting money into something with the
expectation of gain, based on a thorough analysis, and which has a high degree
of security for the principal amount, as well as security of return, within an
expected period of time. In contrast putting money into something with an
expectation of gain without a thorough analysis, without the security of
principal amount as well as without security of return is known as speculation
or gambling. Management of the invested money or funds is
known as investment management
A DERIVATIVE instrument is a
contract between two parties that specifies conditions (especially the dates,
resulting values of the underlying variables, and notional amounts) under which
payments, or payoffs, are to be made between the parties.
Over-the-counter(OTC) derivatives are contracts that are traded (and privately negotiated)
directly between two parties, without going through an exchange or other
intermediary. Products such as
swaps,
forward rate agreements,
exotic
options - and other
exotic derivatives - are
almost always traded in this way. The OTC derivative market is the largest
market for derivatives, and is largely unregulated with respect to disclosure
of information between the parties, since the OTC market is made up of banks
and other highly sophisticated parties, such as
hedge
funds.
Exchange-tradedderivative contracts (ETD) are those derivatives instruments
that are traded via specialized
derivatives exchanges or other
exchanges. A derivatives exchange is a market where individuals trade
standardized contracts that have been defined by the exchange.
[15] A derivatives exchange acts
as an intermediary to all related transactions, and takes
initial
margin from both sides of the trade to act as a guarantee.
- Forwards: A tailored or
designed contract between two parties, where payment takes place at a
specific time in the future at today's pre-determined price.
- Futures: are contracts to buy or sell an asset on or before a future date at a price
specified today. A futures contract differs from a forward contract in
that, while the former is a standardized contract written by a clearing house
that operates an exchange where the contract can be bought and sold, the
latter is a non-standardized contract written by the parties themselves.
- Options are contracts that
give the owner the right, but not the obligation, to buy (in the case of a
call option) or sell (in the case of a put option) an asset. The price at which the
sale takes place is known as the strike price, and is specified at the time the
parties enter into the option. The option contract also specifies a
maturity date. In the case of a European option, the owner has the right to
require the sale to take place on (but not before) the maturity date; in
the case of an American option, the
owner can require the sale to take place at any time up to the maturity
date. If the owner of the contract exercises this right, the counter-party
has the obligation to carry out the transaction.
- Options are of two types: call option and put option. The buyer of a Call option although
has a right to buy a certain quantity of the underlying asset, at a
specified price on or before a given date in the future, he however has no
obligation whatsoever to carry out this right. Similarly, the buyer of a
Put option although has the right to sell a certain quantity of an
underlying asset, at a specified price on or before a given date in the
future, he however has no obligation whatsoever to carry out this right.
- Warrants: Apart from the
commonly used short-dated options which have a maximum maturity period of
1 year, there exists certain long-dated options as well, known as Warrant (finance). These
are generally traded over-the-counter.
Swaps are contracts to
exchange cash (flows) on or before a specified future date based on the
underlying value of currencies exchange rates, bonds/interest rates,
commodities exchange, stocks
or other assets. Another term which is commonly associated to Swap is
Swaption
which is basically an option on the forward Swap. Similar to a Call and Put
option, a Swaption is of two kinds: a receiver Swaption and a payer Swaption.
While on one hand, in case of a receiver Swaption there is an option wherein
you can receive fixed and pay floating, a payer swaption on the other hand is
an option to pay fixed and receive floating.
In other words, mutual funds are
collective investment schemes that are regulated, available to the general
public and open-end in nature that are sold in units.
The main PARTICIPANTS
IN FINANCIAL MARKET are commercial banks, financial institutions (both
domestic and foreign), stock exchanges (both national & regional), lenders
savers, borrowers and regulatory bodies.
CAPITAL MARKET deals with medium & long term securities
while money market deals with only short term securities which have a maturity
period of less than one year. Capital market is further classified into equity
market (ownership securities), debt market (debentures) and derivative market
(forward futures, option swaps)
MONEY MARKET facilitates short term liquidity it meets the working
capital requirement of the industry, trade and commerce. Reserve bank of India
plays a major role in the functioning of money market.
The INSTRUMENTS TRADEDIN MONEY MARKET consist of call money treasury bills, commercial papers,
certificate of deposit and repurchase agreement (REPO) all and NOTICE MARKET is the market for short
term funds up to 14 days. TREASURY BILLS
are short term debt instrument of the central Govt. that are issued at a
discount and redeemed at par. COMMERCIAL
PAPERS are short term unsecured borrowings issued and redeemed at par. CERTIFICATE OF DEPOSIT is normally
issued by banks and financial institution that represent short term deposits
transferable from one person to another.
COMMODITY
MARKETS are markets
where raw or primary products are exchanged. These raw commodities are traded
on regulated commodities
exchanges, in which they are bought
and sold in standardized contracts.
NCDEX is a public limited company
incorporated on 23 April 2003 under the Companies Act, 1956. NCDEX is regulated
by Forward Market
Commission (FMC) in
respect of futures trading in commodities. Besides, NCDEX is subjected to
various laws of the land like the Companies Act, Stamp Act, Contracts Act,
Forward Commission (Regulation) Act and various other legislations, which
impinge on its working. On 3 February 2006, the FMC found NCDEX guilty of
violating settlement price norms and ordered the exchange to fire one of their
executive.
NCDEX is located in Mumbai and
offers facilities in more than 550 centres in India.
NCDEX currently facilitates
trading of 57 commodities -
Agri-based commodities - Castor Seed
Chana
Chilli
Coffee - Arabica, Coffee - Robusta
Cotton Seed Oilcake
Crude Palm Oil
Expeller Mustard Oil
Groundnut (in shell)
Groundnut Expeller Oil
Guar gum
Guar Seeds
Gur, Jeera
Jute sacking bags
Kidney Beans
Indian 28 mm Cotton
Indian 31 mm Cotton
Masoor Grain Bold
Medium Staple Cotton
Mentha Oil
Mulberry Green Cocoons
Mulberry Raw Silk
Rapeseed - Mustard Seed
Pepper
Raw Jute
RBD Palmolein
Refined Soy Oil
Rubber
Sesame Seeds
Soy Bean
Sugar - Small
Sugar - Medium
Turmeric
Urad (Black Matpe)
V-797 Kapas
Yellow Peas
Yellow Red Maize
Yellow Soybean Meal.
Bullion -
Gold 1 KG
Gold 100gm
Silver 30 KG
Silver 5 KG
Energy -
Brent Crude Oil
Furnace Oil
Light Sweet Crude Oil.
Ferrous
metals
Mild Steel Ingot
Plastics
Polypropylene
Linear Low Density Polyethylene
Polyvinyl Chloride.
Non-ferrous metals
Aluminum Ingot,
Copper Cathode
Nickel Ingot
Zinc Cathode
