Thursday 26 December 2013
Wednesday 25 December 2013
FOUL WEATHER FUND
Today's word: FOUL WEATHER FUND
Theme for this fortnight: MUTUAL FUNDS
Theme for this fortnight: MUTUAL FUNDS
A type of mutual fund that
performs well or even better than the market as a whole in weak market
conditions. The goal of these types of funds is to limit or benefit from
downward market effects. Often these funds invest in stocks with lower
volatility.
Tuesday 24 December 2013
DISTRIBUTION WATERFALL
Today's word: DISTRIBUTION WATERFALL
Theme for this fortnight: MUTUAL FUNDS
Theme for this fortnight: MUTUAL FUNDS
Hierarchy of distribution of an
equity fund. This specifies the order of distribution to investors when their
investments are sold. For instance, general investors can only receive their
share of the fund after preferred investors are given their corresponding
shares.
Friday 20 December 2013
COUNTRY BASKET
Today's word: COUNTRY BASKET
Theme for this fortnight: MUTUAL FUNDS
Theme for this fortnight: MUTUAL FUNDS
Exchange traded fund composed of
stocks in foreign countries combined into one security. A country basket allows
an investor to own multiple stocks in his or her portfolio without being
subject to multiple transaction costs and/or multiple securities.
Sunday 15 December 2013
ELEPHANT
Today's word: ELEPHANT
Theme for this fortnight: MUTUAL FUNDS
Theme for this fortnight: MUTUAL FUNDS
Slang for a large institutional
investor such as a mutual fund or pension fund. The term comes from the idea
that these investors move huge amounts of money into and out of assets and sectors
in a herd-like fashion, having a large impact on security prices when they
move.
Friday 13 December 2013
CLONE FUND
Today's word: CLONE FUND
Theme for this fortnight: MUTUAL FUNDS
Theme for this fortnight: MUTUAL FUNDS
A mutual fund started by another
mutual fund as a result of the parent fund's large growth and management's
assessment that the parent is limited as to the investments it can make. For
example, a very large fund would generally be unable to establish investment
positions in small or new corporations. Thus, a new, smaller fund with the same
goals as the older, bigger fund is started. Although the parent fund and clone
fund have the same investment objectives, they purchase different securities
and generally operate under different managements.
Sunday 8 December 2013
DELTA ONE
Today's word: DELTA ONE
Theme for this fortnight: MUTUAL FUNDS
Theme for this fortnight: MUTUAL FUNDS
A category of derivatives for
which a change in the value of the underlying asset results in a change of the same,
or nearly the same, proportion in the value of the derivative. Some examples of
delta one derivatives include equity swaps, forwards, futures, and
exchange-traded funds (ETF's).
Saturday 7 December 2013
BEAR FUNDS
Today's word: BEAR FUNDS
Theme for this fortnight: MUTUAL FUNDS
Theme for this fortnight: MUTUAL FUNDS
Funds that utilize short-selling
methods to quickly make profits during a bear or declining market. These funds
are usually made up of hedge funds and mutual funds. They are actively managed,
and short individual stocks or inverse-index funds that short entire indexes.
Bear funds revolve around the idea of playing with both sides of the market so
that gains in the bear fund offset losses elsewhere in an investor's portfolio.
Bear funds are considered tactical investments, but usually end up being lousy long-term
investments for investors.
Saturday 30 November 2013
DIVIDEND CLAWBACK
Today's word: DIVIDEND CLAWBACK
Theme for this fortnight: DIVIDENDS
Theme for this fortnight: DIVIDENDS
An arrangement under which those
financing a project agree to contribute, as equity, any prior dividends
received from the project to cover any cash shortages.
When there is no cash shortfall,
those investors who provided funding are able to keep their dividends. A
dividend clawback arrangement provides incentive for a project to remain on
budget so that investors do not have to return dividends received prior to a
cost overrun.
Monday 25 November 2013
DIVIDEND DRAG
Today's word: DIVIDEND DRAG
Theme for this fortnight: DIVIDENDS
Theme for this fortnight: DIVIDENDS
A disadvantage of the dividend
structure of unit trust exchange-traded funds (ETFs) that results from SEC
rules that stipulate that passively managed ETFs cannot reinvest dividends back
into the portfolio. ETFs must instead accumulate the dividends in cash and pay
them to holders at periodic intervals. During periods of rising markets, the
dividends would be better served being reinvested in securities rather than
held in cash. This leads the ETF to lag a portfolio that would be able to
reinvest.
Sunday 24 November 2013
SYNTHETIC DIVIDEND
Today's word: SYNTHETIC DIVIDEND
Theme for this fortnight: DIVIDENDS
Theme for this fortnight: DIVIDENDS
A type of incoming cash flow that
an investor creates with certain financial securities to produce a
dividend-like payment stream that resembles the periodic cash receipts from a
dividend-paying stock.
For example, suppose an investor
owns shares in a company that does not pay a quarterly dividend. In order to
create a cash-flow stream from the shares, the investor could write covered
call options on the underlying stock. By doing so, he or she would receive the
option premiums as an incoming cash flow, but would be obligated to sell the
shares to the option-buyer should that person choose to exercise the options.
This situation, while limiting
the potential price appreciation the investor can realize from his or her own
shares, creates a dividend-like cash flow stream.
Thursday 21 November 2013
SPILLOVER DIVIDEND
Today's word: SPILLOVER DIVIDEND
Theme for this fortnight: DIVIDENDS
Theme for this fortnight: DIVIDENDS
A type of dividend in which the
payment year and the taxable year occur at different times. Most often, this
occurs when the dividend has been declared near the end of the calender year
(during the fourth quarter), but the actual distribution date of the dividend
payment does not occur until the first quarter of the following year.
Tuesday 19 November 2013
LOOK THRU
Today's word: LOOK THRU
Theme for this fortnight: DIVIDENDS
Theme for this fortnight: DIVIDENDS
A complex provision defined in
section 954(c)(6) of the U.S. Internal Revenue Code that lowered taxes for many
U.S. multinational companies. The look thru rule gave qualifying U.S.
multinationals a lower global effective tax rate by providing a special
accounting method for calculating taxes owed on income from controlled foreign
corporations. The rule was originally effective from Jan. 1, 2006 through Dec.
31, 2009, but the 2010 Tax Relief Act extended the rule through Dec. 31, 2011.
Saturday 16 November 2013
Wednesday 13 November 2013
HOMEMADE DIVIDEND
Today's word: HOMEMADE DIVIDEND
Theme for this fortnight: DIVIDENDS
Theme for this fortnight: DIVIDENDS
A form of investment income that
comes from the sale of a portion of shares held by a shareholder. This differs
from dividends that shareholders receive from a company according to the number
of shares the shareholder has.
The existence of homemade dividends
is the reason some financial analysts believe that looking at a companies
dividend policy is not important. If investors desires an income stream they
will either sell their shares when they want the income or they will invest in
other income-generating assets.
Tuesday 12 November 2013
CUTTING A MELON
Today's word: CUTTING A MELON
Theme for this fortnight: DIVIDENDS
Theme for this fortnight: DIVIDENDS
A slang term used to describe
when a board of directors declares an additional dividend in addition to the
regular distribution. The additional dividend can be in the form of cash, stock
or property. The board of directors (BOD) is
responsible for deciding how it will share the company's earnings with
shareholders in the form of dividends. In most cases, dividends are issued in
accordance to a set policy and are paid on preset schedule, such as annually or
quarterly.
The BOD is cutting a melon when the company has earned additional income, this is the melon and distributes a portion of it to shareholders. The bigger the melon, the sweeter it tastes to investors!
The BOD is cutting a melon when the company has earned additional income, this is the melon and distributes a portion of it to shareholders. The bigger the melon, the sweeter it tastes to investors!
Sunday 10 November 2013
VRITTAM (03 NOV 2013 - 09 NOV 2013)
THE WEEKLY
FINANCIAL NEWS
Twitter stock slipped 7.24 percent to close at $41.64 -- a day after a stunning gain of 72.69 percent on its first day of trading on the New York Stock Exchange after a $1.8 billion initial public offering. Some analysts said the debut was helped in part by a shortage of Twitter stock, and that most of the 70 million shares were reserved by the underwriters.
Twitter's market capitalization, based on its stock price,
fell back to around $22.6 billion after topping $24 billion on Thursday.
How's QE tapering a bad thing for Indian markets? Well, it would dry up liquidity, which means FIIs would be pulling out, leaving investors run for cover. However, analysts are of the view that even if the US tapers $85-billion-a-month bond purchase programme, it'll be to the tune of $10-20 billion, something that does not contribute to drying up of liquidity from the market. Amidst chances of QE tapering next year, big domestic event to unfold would be general election results, which may give big sentimental boost to the markets on a favourable outcome.
It is not clear if Zomato will live happily ever after but, right now, this company, which lists restaurants city- and locality wise and counts on restaurant advertisements for its revenues, is in the midst of a fairy tale. In five years' time, its founders, a couple of young graduates from the Indian Institute of Technology, Delhi, have created a company valued at Rs900 crore. It has produced huge value for the entrepreneurs and the fund that backed them and created 600-odd jobs. It is expanding to other geographies at a breakneck speed. And it has created this value on the basis of a service of rising utility to urbanising, ever more prosperous Indians.
Zomato, which lists restaurants city- and locality wise and
counts on restaurant advertisements for revenues, is currently valued at Rs900
cr.
Standard & Poor's today affirmed 'BBB-' long-term and 'A-3' short-term unsolicitedsovereign credit ratings on India, keeping outlook on long-term rating negative.The news came as a grinch on Dalal Street, with the Sensex losing more than 300 points from its intraday high.The markets may have reacted negatively to the news, and some experts may start to raise red flags on India's long-term story, but then there's another take on it.
In times of unpredictability, though with a positive standpoint, here's a bad news. The rate of interest that you pay for your home and auto loans is now a tad higher. The State Bank of IndiaBSE -3.40 % (SBI) today raised its base rate by 20 basis points to 10% per annum from the earlier figure of 9.8%.HDFC Bank hiked its base rate by 20 basis points to 10 per cent. This automatically translates into a hike in consumer loans, though earlier banks used to come out with a separate release announcing the rate hike for consumers. Other banks are likely to follow suit.
India is likely to become the third largest economy by 2030 behind China and the USA, a Standard Chartered report said while projecting that the world is in the midst of an economic "super-cycle". A super-cycle is a period of historically high global growth, lasting a generation or more, driven by opening up of new markets, increasing trade, high rates of investment, urbanisation and technological innovation. India is likely to be the third largest economy with a GDP size of USD 15 trillion by 2030, says Standard Chartered's Super-Cycle Report. China with a GDP of USD 53.8 trillion is projected as the biggest economy, followed by the US at USD 38.5 trillion.
Benchmark indices have failed to gather momentum at higher levels and have consolidated in a narrow range so far in this week. The 50-share Nifty has slipped below its psychological level of 6,300, whileSensex struggled to hold onto 21,000 levels. According to analysts, markets are consolidating at this point in time and there is a 50-50 chance that the market rally is over.
Most analysts see levels of 6,080 on the Nifty as a make-or-break for the index.
EXPERT VIEW
By Saurabh Tripathi
Unless government musters the will to push through some bold
reforms, they could lose value irredeemably.
A SNEAK PEAK INTO THE WORLD OF FINANCE
To know how
economic indicators can affect your financial life,click on the slide show
below
Twitter stock slipped 7.24 percent to close at $41.64 -- a day after a stunning gain of 72.69 percent on its first day of trading on the New York Stock Exchange after a $1.8 billion initial public offering. Some analysts said the debut was helped in part by a shortage of Twitter stock, and that most of the 70 million shares were reserved by the underwriters.
How's QE tapering a bad thing for Indian markets? Well, it would dry up liquidity, which means FIIs would be pulling out, leaving investors run for cover. However, analysts are of the view that even if the US tapers $85-billion-a-month bond purchase programme, it'll be to the tune of $10-20 billion, something that does not contribute to drying up of liquidity from the market. Amidst chances of QE tapering next year, big domestic event to unfold would be general election results, which may give big sentimental boost to the markets on a favourable outcome.
It is not clear if Zomato will live happily ever after but, right now, this company, which lists restaurants city- and locality wise and counts on restaurant advertisements for its revenues, is in the midst of a fairy tale. In five years' time, its founders, a couple of young graduates from the Indian Institute of Technology, Delhi, have created a company valued at Rs900 crore. It has produced huge value for the entrepreneurs and the fund that backed them and created 600-odd jobs. It is expanding to other geographies at a breakneck speed. And it has created this value on the basis of a service of rising utility to urbanising, ever more prosperous Indians.
Standard & Poor's today affirmed 'BBB-' long-term and 'A-3' short-term unsolicitedsovereign credit ratings on India, keeping outlook on long-term rating negative.The news came as a grinch on Dalal Street, with the Sensex losing more than 300 points from its intraday high.The markets may have reacted negatively to the news, and some experts may start to raise red flags on India's long-term story, but then there's another take on it.
The S&P’s negative outlook is marginally positive, as the
rating agency has almost ruled out a downgrade before the elections
In times of unpredictability, though with a positive standpoint, here's a bad news. The rate of interest that you pay for your home and auto loans is now a tad higher. The State Bank of IndiaBSE -3.40 % (SBI) today raised its base rate by 20 basis points to 10% per annum from the earlier figure of 9.8%.HDFC Bank hiked its base rate by 20 basis points to 10 per cent. This automatically translates into a hike in consumer loans, though earlier banks used to come out with a separate release announcing the rate hike for consumers. Other banks are likely to follow suit.
India is likely to become the third largest economy by 2030 behind China and the USA, a Standard Chartered report said while projecting that the world is in the midst of an economic "super-cycle". A super-cycle is a period of historically high global growth, lasting a generation or more, driven by opening up of new markets, increasing trade, high rates of investment, urbanisation and technological innovation. India is likely to be the third largest economy with a GDP size of USD 15 trillion by 2030, says Standard Chartered's Super-Cycle Report. China with a GDP of USD 53.8 trillion is projected as the biggest economy, followed by the US at USD 38.5 trillion.
Benchmark indices have failed to gather momentum at higher levels and have consolidated in a narrow range so far in this week. The 50-share Nifty has slipped below its psychological level of 6,300, whileSensex struggled to hold onto 21,000 levels. According to analysts, markets are consolidating at this point in time and there is a 50-50 chance that the market rally is over.
Most analysts see levels of 6,080 on the Nifty as a make-or-break for the index.
By Saurabh Tripathi
A SNEAK PEAK INTO THE WORLD OF FINANCE
To know how
economic indicators can affect your financial life,click on the slide show
belowMonday 4 November 2013
BIRD IN HAND
Today's word: BIRD IN HAND
Theme for this fortnight: DIVIDENDS
Theme for this fortnight: DIVIDENDS
The belief that investors prefer
stocks that are currently paying dividends to stocks whose value may grow
through capital appreciation. The belief is based on the assumption that most
people prefer certainty (dividends) to speculation (capital appreciation).
Thursday 31 October 2013
Wednesday 30 October 2013
INCUBATOR
Today's word: INCUBATOR
Theme for this fortnight: VENTURE CAPITAL
Theme for this fortnight: VENTURE CAPITAL
A firm engaged in the business of
fostering early-stage companies through the developmental phases until such
time as the company has sufficient financial, human and physical resources to
function on its own.
The firm can be either a non-profit or a for-profit entity, and it can provide assistance via any or all of the following methods: 1. access to financial capital through relationships with financial partners, 2. access to experienced business consultants and management-level executives, 3. access to physical location space and business hardware or software and 5. access to informational and research resources via relationships with local universities and government entities.
The firm can be either a non-profit or a for-profit entity, and it can provide assistance via any or all of the following methods: 1. access to financial capital through relationships with financial partners, 2. access to experienced business consultants and management-level executives, 3. access to physical location space and business hardware or software and 5. access to informational and research resources via relationships with local universities and government entities.
Monday 28 October 2013
VRITTAM (20 OCT 2013 - 26 OCT 2013)
THE WEEKLY FINANCIAL NEWS
Festive season: Discounts, freebies galore as cos try
to woo consumers
As the festive season sales peaks,
consumers are spoilt for choices as companies and service providers flood the
market with discount and freebies. Consumer durables makers have come with
offers as assured gifts, cash backs and special packages as free installation,
discount on annual maintenance cost, free insurance etc to boost up their sales festive
season. South Korean major LG is storming the market with offers like free 3D
Blue Ray Home Theater with selected high end televisions, free LED TV 24 and 22
inch, with the purchase of designated high end television models and an assured
Magic Motion Remote with the purchase of selected smart TV models.
Consumer durables makers have come with offers as assured gifts, cash backs and special packages as free installation etc to boost up their sales festive season.
India to build $300 billion forex chest to counter a
slimmer QE figure
India hopes to have a
$300-billion war chest ready by the end of the year as a frontline defence
against tapering by the US
Federal Reserve, which is now expected to begin sometime early next
year. The finance
ministry expects $30 billion to be
added to its foreign
exchange reserves, currently estimated at $251 billion, by the end of
November.
EXPERT VIEW
Gold coin not a gift option anymore this Diwali
By Sutanuka Ghosal, ET Bureau
A SNEAK PEAK INTO THE WORLD OF FINANCE
To know the five
mistakes people make while setting financial goals, click on the slideshow
below.
Festive season: Discounts, freebies galore as cos try
to woo consumers
As the festive season sales peaks,
consumers are spoilt for choices as companies and service providers flood the
market with discount and freebies. Consumer durables makers have come with
offers as assured gifts, cash backs and special packages as free installation,
discount on annual maintenance cost, free insurance etc to boost up their sales festive
season. South Korean major LG is storming the market with offers like free 3D
Blue Ray Home Theater with selected high end televisions, free LED TV 24 and 22
inch, with the purchase of designated high end television models and an assured
Magic Motion Remote with the purchase of selected smart TV models.Consumer durables makers have come with offers as assured gifts, cash backs and special packages as free installation etc to boost up their sales festive season.
India to build $300 billion forex chest to counter a
slimmer QE figure
India hopes to have a
$300-billion war chest ready by the end of the year as a frontline defence
against tapering by the US
Federal Reserve, which is now expected to begin sometime early next
year. The finance
ministry expects $30 billion to be
added to its foreign
exchange reserves, currently estimated at $251 billion, by the end of
November.Post offices, cooperative banks the next Amul success story in banking?
When there are nearly
96,000 co-operative banks spread over thousands of villages and post offices
located in 2.38 lakh panchayats, is there a need for a fresh set of
institutions to harness the savings of people in rural India? This may be the
turn of financial services to have its own Amul,
the milk co-operative that has delivered prosperity to millions of rural folk,
and proved that it could still be a business model.
US QE tapering: FM P Chidambaram wants regulators to take preventive steps
Finance
Minister P Chidambaram today asked financial sector regulators, including RBI
and Sebi, to take preventive steps to neutralise the impact of US Federal
Reserve's monetary stimulus tapering that is likely early next year. Chidambaram, according to sources, asked regulators at
FSDC meeting to work out preventive measures. The Financial Stability and
Development Council (FSDC) members include heads of regulatory bodies like RBI,
Sebi and IRDA.
Tata-Singapore Airlines aviation venture gets FIPB nod without any riders
The Foreign Investment
Promotion Board (FIPB) has approved Tata group's proposal to set up a full
service airline in partnership with Singapore Airlines, paving the runway for the high-profile
aviation venture to take to the skies in the months ahead. The board has not imposed any rider on the venture. All
departments and ministries had cleared the proposal. An earlier proposal by the Tata group to set up a low-cost airline together with Malaysia's Air
Asia had encountered some
problems a few months ago.
Final costs of US shutdown could tally in billions
The government
shutdown that ended this week will cost the U.S. economy several billion
dollars, according to estimates by economic research firms. But the affiliated
damage - like the undermining of consumer and business confidence - will be far
greater, economists said, especially combined with the financial effects of the
near-breach of the country's statutory debt ceiling. When the federal
government shut down Oct. 1, permit offices across the country stopped
accepting fees, contractors stopped receiving checks and research projects were
put on hold. Such disruptions come with a price tag, although it will be small
in the context of the $3.5 trillion the federal government spends every year.
Income Tax department puts HRA exemption under scanner
As if the additional
information required in tax returns was not enough, there's more bad news for
tax evaders. Salaried taxpayers who claim HRA exemption will now
have to report their landlord's PAN if the total rent in a year exceeds Rs 1 lakh. "In
case the landlord does not have a PAN, he must submit a declaration to this
effect from the landlord along with the name and address of the landlord should
be filed by the employee," says a circular issued by the Central
Board of Direct Taxes last week.Till now, if
the total rent paid was less than Rs 15,000 a month, there was no need to
submit the landlord's PAN details. The new rule effectively reduces this limit
to Rs 8,333 a month.
Special RBI measures got India $ 9.6 bn in forex: P Chidambaram
India has received
over nine billion dollars from two foreign schemes, which were announced in
September to attract foreign funds and help the country to bridge the widening current
account deficit(CAD). Soon after taking over
as RBI Governor on September 4, Raghuram Rajan had announced opening of a swap
window facility to encourage banks to lure NRI funds.
Under the facility, banks are permitted to swap fresh FCNR(B) dollar funds, mobilised for a minimum tenor of three years, at a fixed rate of 3.5 per cent per annum for the tenor of the deposit. Also, he had relaxed norms for banks and allowed them to raise capital abroad to the tune of 100 per cent of their Tier I (equity) capital. tic staff
Under the facility, banks are permitted to swap fresh FCNR(B) dollar funds, mobilised for a minimum tenor of three years, at a fixed rate of 3.5 per cent per annum for the tenor of the deposit. Also, he had relaxed norms for banks and allowed them to raise capital abroad to the tune of 100 per cent of their Tier I (equity) capital. tic staff
India's mobile economy to contribute $400 billion to GDP by 2020
Mobile economy in
India, world's second largest market by subscribers, will contribute around USD
400 billion to the country's GDP and create 4.1 million jobs by 2020, a report
by the global mobile operators industry body GSMA said. Mobile economy will
also lead to investments of USD 9 billion in telecom infrastructure, said the
'Mobile Economy India 2013' report prepared in collaboration with consulting
firm Boston
Consulting Group.
Government for minimum 6 pc of vehicle price as registration tax
The government has
favoured a levy of a minimum 6 per cent of the sale price of the vehicle as a
lifetime tax by various states. Ministry of Road Transport and Highways
recommended all the states should levy a lifetime tax at floor rate of 6 per
cent of the sale price of the 2-wheelers, cars and LMVs ( light
motor vehicles).
EXPERT VIEW
By Sutanuka Ghosal, ET Bureau
A SNEAK PEAK INTO THE WORLD OF FINANCE
To know the five
mistakes people make while setting financial goals, click on the slideshow
below.
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