Equity :

The part of something - asset, house or company - which you own. What the
professionals call shares. Total equity capital of a company is divided into equal
units of small denominators, each called share.
For example, in a company the total equity capital of Rs 200,00,000 is divided
into 20,00,000 units of Rs 10 each. Each such unit of rs 10 is called a share.
Thus, the company then is said to have 20,00,000 equity shares of Rs 10 each.
The Holders of such shares are members of the company and have voting rights

Debt :

Debt instrument represents a contract whereby one party lends money to

another on pre-determined terms with regards to rate and periodicity of interest,
repayment of principal amount by the borrower to the lender.
In the Indian securities markets, the term bond is used for debt instruments
issued by the central and State governments and public sector organizations and
the term ‘debenture’ is used for instruments issued by private corporate sector

Balanced Funds :

A fund that combines a stock component, a bond component and, sometimes, a

money market component, in a single portfolio. Generally, these hybrid funds
stick to a relatively fixed mix of stocks and bonds that reflects either a moderate
(higher equity component) or conservative (higher fixed-income component)
orientation. Balanced fund is also known as hybrid fund. It is a type of mutual
fund that buys a combination of common stock, preferred stock, bonds, and
short-term bonds, to provide both income and capital appreciation while
avoiding excessive risk.

Advantages of Balanced Fund

 • Generally, balanced funds maintain a 60:40 equity debt ratio. This
means that 60% of their total investment is in equity and the balance
40% in debt and cash equivalents. Balance funds combine the power of
equities (shares) and the stability of debt market instruments (fixed
return investments like bonds) and provide both income and capital
appreciation while avoiding excessive risk.

• Balanced funds continuously rebalance their portfolios to ensure that the

broad asset allocation is not disturbed. Therefore, the profits earned
from the stock markets are encashed and invested in low risk
instruments. This helps the investor in maintaining the appropriate asset
mix, without getting into the hassles of rebalancing the portfolio on their
own.

Significance

A balanced fund is for people who want their investment to produce income
while simultaneously growing in value. Balanced funds are also called "growth
and income funds" and "hybrid funds." They attempt to balance risk and reward
by providing a little of each. During bear markets, when the stock market is
falling, balanced funds minimize losses with their diversity. During bull
markets, when the stock market is rising, balanced funds tend to grow less than
more aggressive investments.

Types

Balanced funds contain many types of investments. To produce income,

balanced funds invest in bonds and dividend paying stocks. To produce capital
appreciation, balanced funds invest in aggressive stocks. Balanced funds also
hold a small percentage of holdings in money market accounts. This provides an
ready supply of cash to purchase new holdings and is a place to put proceeds
from recently liquidated holdings. The amount of cash held in a balanced fund
at any one time is often limited to a certain percentage of the balanced fund.

Features

Different balanced funds have different features. Some have a more aggressive
investment philosophy. They tend to have a greater proportion of growth stocks.
Balanced funds with conservative investment philosophies tend to have more
income producing bonds. The variety of balanced funds with different features
gives the investor plenty of choices. By shopping around, they can find one that
suits their specific investment needs.

Identification

Each balanced fund identifies its investment philosophy in its prospectus.

Mutual fund companies specify the proportions of stocks, bonds and cash they
strive to maintain. Usually this is a range of 5 percent to 10 percent so balanced
fund managers have some flexibility with investments. However, they must
maintain specific minimum and maximum levels of specific types of securities.

Considerations

A balanced fund functions well for those who want a middle of the road type of
investment. However, balanced funds do not change to suit an investor's
changing needs. For example, people investing for retirement or a child's
college education can be aggressive when the goal is many years away.
However, financial planners suggest switching to more conservative
investments as the date approaches. To do this an investor must switch to more
conservative balanced funds over time or invest in a date targeted mutual fund.
They act like balanced funds that change their asset allocation automatically.

Index Funds:
Index funds are mutual fund investments that mimic the performance of a
particular market index. A market index follows a collection of financial
securities that represent the performance of the market as a whole or a particular
sector like bonds, international stocks or small cap stocks. Index funds attempt
to reflect the market indexes which, in turn, attempt to reflect the financial
markets. Investors buy index funds when they want their returns to reflect wider
trends in the economy.

Types

There are several types of index funds. The most common ones mimic the
holdings of the major stock market indexes. The Standard and Poor's 500 Index
and the the DJ Wilshire 5000 follow the stock market as a whole. The Russell
2000 follows small company stocks. The MSCI EAFE follows international
stocks in Europe and Asia. The Lehman Aggregate Bond Index follows the
bond market.

Benefits

Index funds are considered passive investments. There are no fund managers
deliberately making investment decisions. Instead, securities are purchased to
mimic indexes, and the market dictates its performance. There are some fees to
pay for administrative costs, but they tend to be significantly lower than actively
managed funds. This can save an investor a significant amount of money over
several years.

Potential

Index funds outperform a majority of actively managed funds. This fact,

combined with the lower management expense ratios, makes index funds
popular with investors. Index funds tend to be longer term investments since
investors are attempting to grow their portfolios with an expanding stock market
. This results in lower share turnover. When investors buy and sell shares less
frequently, the expenses can stay low.
Features

Index funds purchase more of certain stocks in an index because of market

capitalization. This is the market value of the company's outstanding shares. If a
particular company's outstanding shares are worth twice as much as another
company, the index fund will own twice as much of it. This means that index
fund holdings are weighted more heavily in larger company stocks. The money
is invested proportionately to the way money is invested in the market at large.

Considerations

Investors should consider the pros and cons of index funds before investing in
them. Index funds do well when there is a bull market and the stock market is
growing. Index fund shares increase in value and the lower fees mean greater
profits when the shares are sold. However, in a bear market, index funds are
reduced in value the same as the indexes they follow. Since index funds are
required to maintain holdings that reflect a particular index, they have limited
flexibility to shift holdings to react to a market downturn.

Hedging:

Hedging, in simple words, means reducing or controlling risk. This is done by

taking a position in the futures market that is opposite to the one in the physical
market with the objective of reducing or limiting risks associated with price
changes.

In finance, a hedge is an investment that is taken out specifically to reduce or

cancel out the risk in another investment. Hedging is a strategy designed to
minimize exposure to an unwanted business risk, while still allowing the
business to profit from an investment activity.Typically, a hedger might invest
in a security that he believes is under-priced relative to its "fair value" (for
example a mortgage loan that he is then making), and combine this with a short
sale of a related security or securities. Thus the hedger is indifferent to the
movements of the market as a whole, and is interested only in the performance
of the 'under-priced' security relative to the hedge.
Process of protecting oneself against unfavourable changes in prices. Thus one
may enter into an offsetting purchase or sale agreement for the express purpose
of balancing out any unfavorable changes in an already consummated
agreement due to price fluctuations.
Hedge transactions are commonly used to protect positions in (1) foreign
currency, (2) commodities, and (3) securities.

Hedge Funds:
‘To hedge’ means to minimize risk or insulate oneself. Conventionally the term
'hedge fund' is used to refer to a type of private investment vehicle that invests
all or most of its assets in publicly traded securities and hedges the investors’
risk from market exposure. These
investment vehicles are commonly structured as limited partnerships in which
the investment manager, or the investment manager's capital management
company, acts as the general partner while the investors act as the limited
partners. These funds are alternative investment vehicles and are generally
available to high net worth individuals and institutional investors. For the
investors who make up the fund, there is usually little or no market liquidity. In
fact they usually have a minimum lock in period ranging from one to three
years.
These are a form of private investment funds at the cost of a performance fee
and open to only a limited investors group. Hedge funds in US are open to only
a few accredited investors. These hedge funds basics qualify them to be
exempted from direct regulations of thestate.
Hedge funds definition says these funds are meant to hedge the investment
through various techniques from the potential fluctuations in terms of losses in
the markets. The hedge fund returns do net get affected by the direction of the
underlying market. This type of hedge funds accounting is achieved by:

○ Investing in the safer areas that are less likely to be affected by drop in
markets

○ Marketing through derivative methods as opposed to direct market

exposure

○ Holding defensive instruments like cash in times of market failure

○ By taking short as well as long market positions and negating the market
exposure

Hedge funds jobs include the services of a hedge fund manager who charges a
performance fee normally 1% or 2% and management of the various hedge
funds investment strategies. The hedge fund managers have increased in
numbers since the use of their skills is maximized in terms of returns for the
investors as well as the hedge fund managers due to the regulations free
accounting of hedge funds.
The hedge fund strategies include a lot of assets and are thus defined clearly
and with utmost care. Hedge funds were demystified in the Indian markets only
recently when the market opened up to newer investment opportunities. The
hedge funds database is managed regularly to keep track of the investment
patterns of the market.

Hedge funds explained the growth of short positions in the markets. The market
failures do not affect hedge fund investors and hedge fund managers due to the
liquidity leverage they bring. The hedge fund manager or administrator acts as
an analyst keeping track of the hedge funds news, bonus returns, quotes,
valuations and returns. The hedge fund statistics include a careful research on
all these factors to avoid any kind of fraud in the valuations.
Hedge funds in also available in forms like hedge fund ETF and hedge funds
real estate. Hedge funds ETF is a form of mutual fund that offers more
flexibility and for real estate hedge funds, these offer investment opportunities
in real estate markets with higher liquidity. The hedge fund investor is
determined on the basis of the NAV (Net Asset Value) of the company or their
businesses.

Being an extremely complicated investment solution, hedge fund employment

is limited with only the privileged ones having the optimum hedge fund
education get the opportunity to serve as hedge funds managers. The bonus and
perks of the industry are also innumerable. Since the hedge funds are basically
a product for the richest of the rich who wish to remain rich with no direct
effects from the crash of the local market, the hedge fund managers are
amongst the most well paid in the industry.

Futures and Options :

Futures and options represent two of the most common form of "Derivatives".
Derivatives are financial instruments that derive their value from an 'underlying'

Derivatives are of two types –

Exchange traded and over the counter - Exchange traded derivatives, as the
name signifies are traded through organized exchanges around the world. These
instruments can be bought and sold through these exchanges, just like the stock
market. Some of the common exchange traded derivative instruments are
futures and options
Futures

A 'Future' is a contract to buy or sell the underlying asset for a specific price at a
pre-determined time. If you buy a futures contract, it means that you promise to
pay the price of the asset at a specified time. If you sell a future, you effectively
make a promise to transfer the asset to the buyer of the future at a specified
price at a particular time. Every futures contract has the following features:

• Buyer

• Seller

• Price

• Expiry

Some of the most popular assets on which futures contracts are available are
equity stocks, indices, commodities and currency.

The difference between the price of the underlying asset in the spot market and
the futures market is called 'Basis'. (As 'spot market' is a market for immediate
delivery) The basis is usually negative, which means that the price of the asset
in the futures market is more than the price in the spot market. This is because
of the interest cost, storage cost, insurance premium etc., That is, if you buy the
asset in the spot market, you will be incurring all these expenses, which are not
needed if you buy a futures contract. This condition of basis being negative is
called as 'Contango'.

Sometimes it is more profitable to hold the asset in physical form than in the
form of futures. For eg: if you hold equity shares in your account you will
receive dividends, whereas if you hold equity futures you will not be eligible for
any dividend.

When these benefits overshadow the expenses associated with the holding of
the asset, the basis becomes positive (i.e., the price of the asset in the spot
market is more than in the futures market). This condition is called
'Backwardation'. Backwardation generally happens if the price of the asset is
expected to fall.
It is common that, as the futures contract approaches maturity, the futures price
and the spot price tend to close in the gap between them ie., the basis slowly
becomes zero.

Options

An option contract gives the buyer the right, but not the obligation to buy/sell an
underlying asset at a pre-determined price on or before a specified time. The
option buyer acquires a right, while the option seller takes on an obligation. It is
the buyer’s prerogative to exercise the acquired right. If and when the right is
exercised, the seller has to honour it. The underlying asset for option contracts
may be stocks, indices, commodity futures, currency or interest rates

Types of options

Broadly speaking, options can be classified as ‘call’ options and ‘put’ options.
When you buy a ‘call’ option, on a stock, you acquire a right to buy the stock.
And when you buy a ‘put’ option, you acquire a right to sell the stock. You can
also sell a ‘call’ option, in which, you will acquire an obligation to deliver the
stock. And when you sell a ‘put’ option, you acquire an obligation to buy the
stock.

A put option (sometimes simply called a "put") is a financial contract between

two parties, the seller (writer) and the buyer of the option. The buyer acquires a
short position offering the right, but not obligation, to sell the underlying
instrument at an agreed-upon price (the strike price). If the buyer exercises the
right granted by the option, the seller has the obligation to purchase the
underlying at the strike price. In exchange for having this option, the buyer pays
the writer a fee (the option premium). The terms for exercise differ depending
on option style. A European put option allows the holder to exercise the put
option for a short period of time right before expiration, while an American put
option allows exercise at any time before expiration.

The most widely-traded put option are on equities. However, options are traded
on many other instruments such as interest rates (see interest rate floor) or
commodities.

A call option is a financial contract between two parties, the buyer and the
seller of this type of option. It is the option to buy shares of stock at a specified
time in the future.[1]Often it is simply labeled a "call". The buyer of the option
has the right, but not the obligation to buy an agreed quantity of a particular
commodity or financial instrument (the underlying instrument) from the seller
of the option at a certain time (the expiration date) for a certain price (the strike
price). The seller (or "writer") is obligated to sell the commodity or financial
instrument should the buyer so decide. The buyer pays a fee (called a premium)
for this right.

The buyer of a call option wants the price of the underlying instrument to rise in
the future; the seller either expects that it will not, or is willing to give up some
of the upside (profit) from a price rise in return for the premium (paid
immediately) and retaining the opportunity to make a gain up to the strike price

Repo (Repurchase) Rate

Repo rate is the rate at which banks borrow funds from the RBI to meet the gap
between the demand they are facing for money (loans) and how much they have
on hand to lend.
If the RBI wants to make it more expensive for the banks to borrow money, it
increases the repo rate; similarly, if it wants to make it cheaper for banks to
borrow money, it reduces the repo rate

Reverse Repo Rate

The rate at which RBI borrows money from the banks (or banks lend money to
the RBI) is termed the reverse repo rate. The RBI uses this tool when it feels
there is too much money floating in the banking system

If the reverse repo rate is increased, it means the RBI will borrow money from
the bank and offer them a lucrative rate of interest. As a result, banks would
prefer to keep their money with the RBI (which is absolutely risk free) instead
of lending it out (this option comes with a certain amount of risk)

Consequently, banks would have lesser funds to lend to their customers. This
helps stem the flow of excess money into the economy

Reverse repo rate signifies the rate at which the central bank absorbs liquidity
from the banks, while repo signifies the rate at which liquidity is injected.

Bank rate

Bank rate, also referred to as the discount rate, is the rate of interest which a
central bank charges on the loans and advances that it extends to commercial
banks and other financial intermediaries. Changes in the bank rate are often
used by central banks to control the money supply.

This is the rate at which RBI lends money to other banks (or financial
institutions).

The bank rate signals the central bank’s long-term outlook on interest rates. If
the bank rate moves up, long-term interest rates also tend to move up, and vice-
versa.
Banks make a profit by borrowing at a lower rate and lending the same funds at
a higher rate of interest. If the RBI hikes the bank rate (this is currently 6 per
cent), the interest that a bank pays for borrowing money (banks borrow money
either from each other or from the RBI) increases. It, in turn, hikes its own
lending rates to ensure it continues to make a profit.

Cash Reserve Ratio

Cash Reserve Ratio is a bank regulation that sets the minimum reserves each
bank must hold to customer deposits and notes.

These reserves are designed to satisfy withdrawal demands, and would normally
be in the form of fiat currency stored in a bank vault (vault cash), or with a
central bank.

The reserve ratio is sometimes used as a tool in monetary policy, influencing the
country’s economy, borrowing, and interest rates.

Cash reserve Ratio (CRR) in India is the amount of funds that the banks have to
keep with RBI. If RBI decides to increase the percent of this, the available
amount with the banks comes down. RBI is using this method (increase of CRR
rate), to drain out the excessive money from the banks

Inflation :

Inflation is defined as a sustained increase in the general level of prices for

goods and services. It is measured as an annual percentage increase.
When inflation goes up, there is a decline in the purchasing power of money.
For example, if the inflation rate is 2% annually, then theoretically a Rs 50 pack
of Tea will cost Rs 51 in a year.
There are several variations on inflation:

• Deflation is when the general level of prices is falling. This is the

opposite of inflation.
 • Hyperinflation is unusually rapid inflation. In extreme cases, this can lead
to the breakdown of a nation's monetary system.

• Stagflation is the combination of high unemployment and economic

stagnation with inflation.

Debenture :

A debenture is defined as a certificate of agreement of loans which is given

under the company's stamp and carries an undertaking that the debenture holder
will get a fixed return (fixed on the basis of interest rates) and the principal
amount whenever the debenture matures. A debenture is a long-term debt
instrument used by governments and large companies to obtain funds.

It is defined as "any form of borrowing that commits a firm to pay interest and
repay capital. Debenture holders have no voting rights and the interest given to
them is a charge against profit.

Prime Lending Rate :

Prime lending rate as the rate of interest at which banks lend to their credit-
worthy or favored customers. It is treated as a benchmark rate for most retail
and term loans.

Excessive money in the economy leads to inflationary trends. To control

inflation, government may curb the money supply by increasing the lending
rates or PLR. When RBI increases the PLR, banks may follow suit, making
borrowing a costlier affair.

Statutory Liquidity Ratio (SLR) :

SLR is the portion that banks need to invest in the form of cash, gold or
government approved securities. The quantum is specified as some percentage
of the total demand and time liabilities of the bank and is set by the Reserve
Bank of India.
Derivative :

Derivative is a product whose value is derived from the value of one or more
basic variables, called underlying. The underlying asset can be equity, index,
foreign exchange, commodity or any other asset.

SWAP :

In finance, a swap is a derivative in which two counterparties agree to exchange

one stream of cash flow against another stream. These streams are called the
legs of the swap.

The cash flows are calculated over a notional principal amount, which is usually
not exchanged between counterparties. Consequently, swaps can be used to
create unfunded exposures to an underlying asset, since counterparties can earn
the profit or loss from movements in price without having to post the notional
amount in cash or collateral.

Swaps can be used to hedge certain risks such as interest rate risk, or to
speculate on changes in the expected direction of underlying prices

A swap is an agreement between two parties to exchange future cash flows

according to a prearranged formula. They can be regarded as portfolios of
forward contracts. The streams of cash flows are called “legs” of the swap.
Usually at the time when the contract is initiated at least one of these series of
cash flows is determined by a random or uncertain variable such as an interest
rate, foreign exchange rate, equity price or commodity price.

Most swaps are traded over-the-counter (OTC), "tailor-made" for the

counterparties. Some types of swaps are also exchanged on futures markets such
as the Chicago Mercantile Exchange Holdings Inc., the largest U.S. futures
market, the Chicago Board Options Exchange and Frankfurt-based Eurex AG.
David Swensen, a Yale Ph.D. at Salomon Brothers, engineered the first swap
transaction according to "When Genius Failed: The Rise and Fall of Long-Term
Capital Management" by Roger Lowenstein.
The five generic types of swaps, in order of their quantitative importance, are:
interest rate swaps, currency swaps, credit swaps, commodity swaps and equity
swaps.

Open ended fund :

An open-ended fund is a collective investment scheme which can issue and

redeem shares at any time. An investor will generally purchase shares in the
fund directly from the fund itself rather than from the existing shareholders

A type of mutual fund where there are no restrictions on the amount of shares
the fund will issue. If demand is high enough, the fund will continue to issue
shares no matter how many investors there are. Open-end funds also buy back
shares when investors wish to sell. Most of the mutual funds available in the
marketplace are open-end funds. Open-end funds are generally managed
actively and are priced according to their net asset value (NAV).

In terms of Banking, it is a type of Investment Company that sells new shares to

the public and stands ready to buy back (redeem) its shares at the market price
when investors wish to sell. Open-end investment companies are better known
to the public as Mutual Funds and are so named because these companies are
continually creating new shares when they sell securities.

Close ended fund:

A closed-end fund or closed-ended fund is a collective investment scheme

with a limited number of shares. New shares are rarely issued after the fund is
launched; shares are not normally redeemable for cash or securities until the
fund liquidates. Close ended funds makes available to the public fixed numbers
of shares in the IPO also called initial public offering. These shares are traded
on the stock exchange.

The price of a share in a closed-end fund is determined partially by the value of

the investments in the fund, and partially by the premium (or discount) placed
on it by the market. Share prices are not ascertained by NAV or Net asset
value. The market price of a fund share is often higher or lower than the per
share NAV: when the fund's share price is higher than per share NAV it is said
to be selling at a premium; when it is lower, at a discount to the per share NAV.

ELSS:

An Equity Linked Savings Scheme (ELSS) is a tax saving instrument

provided by mutual funds. It is a savings scheme that’s linked to equity. A
savings scheme must necessarily be for the long term, and there’s a certain
amount of risk involved.

An ELSS has a lock-in period of three years, which entails a minimum

investment of Rs 5,000. It offers the benefits of getting equity linked returns and
with the additional benefit of tax saving.

SIP:

The Systematic Investment Plan (SIP) is simply an investment mode i.e. a

means to invest in mutual funds and not an investment avenue. When an
investor chooses to invest via an SIP, he makes investments (usually) in smaller
denominations at regular time intervals as opposed to making a single lump sum
investment. The underlying intention is to benefit from the volatility in equity
markets by lowering the average purchase cost.

The Systematic Investment Plan (SIP) is a simple and time honored investment
strategy for accumulation of wealth in a disciplined manner over long term
period. The plan aims at a better future for its investors as an SIP investor gets
good rate of returns compared to a one time investor.

NAV:
Most commonly used in reference to mutual and close-end funds, Net Asset
Value (NAV) measures the value of a fund’s assets, minus its liabilities. NAV
is typically calculated on a per-share basis. A fund’s NAV fluctuates along with
the value of its underlying investments.

NAV= (Market value of all securities held by funds + Cash and equivalent
holdings – Fund liabilities) / Total fund shares outstanding

Net Asset Value is like stock prices in that they measure the value of one share
of a fund. Also, they give investors a way to compare fund’s performance with
market or industry benchmarks.

Arbitrage:

The simultaneous purchase and sale of an asset in order to profit from a

difference in the price. It is a trade that profits by exploiting price differences of
identical or similar financial instruments, on different markets or in different
forms.

Arbitrage is the practice of taking advantage of a price differential between two

or more markets: striking a combination of matching deals that capitalize upon
the imbalance, the profit being the difference between the market prices. When
used by academics, an arbitrage is a transaction that involves no negative cash
flow at any probabilistic or temporal state and a positive cash flow in at least
one state; in simple terms, a risk-free profit.

Arbitrage exists as a result of market inefficiencies; it provides a mechanism to

ensure prices do not deviate substantially from fair value for long periods of
time.

Warrants

Security

Preference shares
Cumulative shares

Perpetual shares

Redeemable preference shares

Non-voting equity

Buyback of shares

Deposit receipt

Hold time maturity

Yeild time maturity

Quasi Equity

Venture capital

Non-convertible deposits

Partial convertible deposits

Fully convertible Deposits

Trade Off

Return

Cash return

Capital return

Dividend

Nomianl return

Real return

Expected return

Required return

Actual (realized)

Ex-ante

Ex-post
Risk

Systematic risk

Unsystematic risk

Certificate of deposit

Commercial bills

Call money

Treasury bills

ADR

SDR

GDR

NBFC

BSE

NSE

Beta

Financial ratios
Financial ratio analysis is the calculation and comparison of
ratios which are derived from the information in a company's
financial statements. The level and historical trends of these
ratios can be used to make inferences about a company's
financial condition, its operations and attractiveness as an
investment.

Depreciation

EPS

Dividend payout ratio

Capital market

Money market
NYSE

Face value

Book value

Subscribed value

Capital account convertability

EPCH scheme

NBFC
duty exemption passbook scheme

Inward FDI flows

Authorised capital
Paid Up capital
Right Issue: Right issue is the share that a company offers to its existing
shareholders. The number of right issue to be offered to an investor depends on
the number of shares that the investor is currently holding. While the right issue
is offered to the shareholders, he or she has the right to buy a shares or ignore
the right issue offer to lapse or even sell the entitlement of the shares. The
companies offer the right issue to get more fund from the equity to meet their
capital requirement or further expansion of the business. In most cases one
share is allotted for two shares.
When the right issue is offered to the existing share holders, it is offered to
them at a lower price than the existing price of the stock at the stock market.
But that does not mean that the shareholders can make huge profit from this
price difference. This is because after the right issue is offered price of that
particular stock falls in the stock market. It happens because the number of
stock of that company increases in the market. Especially if the number of the
right issue is relatively higher than the paid-up capital the price falls. Moreover
the dividend yield and the PE ratio of that particular stock also falls after the
right issue is offered.
Theoretically the right issue does not give significant profit to the shareholders
in spite of the fact that they get the stock in lower price. But in practice the
shareholders always find the right issue an attractive option to buy the shares of
the company. This is because the presume that the company is going to utilize
the additional fund from the right issue for further development and expansion
of the company that will eventually strengthen the financial standing of the
company.
Recently SBI has issued it.
Depreciation:
Depreciation is a term used in accounting, economics and finance to spread the cost of an
asset over the span of several years.
In simple words we can say that depreciation is the reduction in the value of an asset due to
usage, passage of time, wear and tear, technological outdating or obsolescence, depletion,
inadequacy, rot, rust, decay or other such factors.
Amortisation:
Zero based budgeting: