Liquidity Ratios
March 6th, 2014
Does your firm have enough cash on an ongoing basis to meet its operational obligations? This is an important indication of financial health. Liquidity ratios provide information about a firm’s ability to meet its short-term financial obligations. They are ...
Mutual Funds
March 6th, 2014
An open-ended fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. Mutual funds raise money by selling shares of the fund to ...
SWAPS
March 6th, 2014
A Swap is an agreement between two parties (the counterparties) to exchange a series of future cash flows at specified future times according to pre-specified conditions, typically with a notional principal and a stated maturity, often close to the ...
Forward Rate Agreement (FRA)
March 6th, 2014
Forward rate agreement (FRA) is an over-the-counter contract in which one party pays a fixed interest rate, and receives a floating interest rate equal to a reference rate (the underlying rate). The payments are calculated over a notional amount ...
Differences between Forward and Future contracts
March 6th, 2014
Forward Futures Not standardized. They offer flexibility in terms of maturity date and contract amount, but they lack liquidity because there is no standard format. Standardized. They are for standard amounts and for standard maturity dates, usually the third ...
Future Contracts
March 6th, 2014
A future contract is a legally binding agreement between two parties to buy or sell a specific quantity of a specific underlying instrument on a certain date in the future (expiry date) at a price agreed upon when concluding ...
Options
March 6th, 2014
Options on stocks were first traded on an organized exchange in 1973. Since then there has been a dramatic growth in options markets. Options are now traded on many exchanges throughout the world. Huge volumes of options are also ...
Warrants
March 6th, 2014
A warrant is a time-limited right to subscribe for shares, debentures, loan stock or government securities and is exercisable against the original issuer of the underlying securities. It is an interest and dividend-free securities, granting the holder the right ...
Bonds
March 6th, 2014
Bonds are negotiable debt instruments issued, in capital markets with the purpose of raising capital. Investors who acquire bonds are lenders to the issuers. Particularly, investors lend some amount of money, the principal, to the borrower. In return, the ...
Shares
March 6th, 2014
A share is an instrument (security) representing a shareholder’s rights in a company. A share is an equal portion in the capital of the company. It represents ownership interest in a firm. Investing in common shares involves all the ...
