Money market is a market for short-term loan or financial assets. It as a market for the lending and borrowing of short term funds. As the name implies, it does not actually deals with near substitutes for money or near money like trade bills, promissory notes and government papers drawn for a short period not exceeding one year. These short term instruments can be converted into cash readily without any loss and at low transaction cost. Money market is the centre for dealing mainly in short — term money assets. It meets the short-term requirements of borrowers and provides liquidity or cash to lenders. It is the place where short-term surplus funds at the disposal of financial institutions and individuals are borrowed by individuals, institutions and also the Government. Features of Money Market The following are the general features of a money market: It is market purely for short-term funds Continue reading
Investment Options
Investments in Mutual Funds – Maximize Returns with Mutual Funds
Mutual fund companies [also known as Asset Management Companies (AMCs) collect funds from public (mainly from small investors) and invest such funds in market and distribute returns/surpluses in the form of dividends. Surpluses can also be reflected in higher Net Asset Value (NAV) of the scheme. In simple words, a mutual fund company collects savings of small investors (pool their money); the fund managers of the concern invest such pool of funds to market (securities); when returns are generated from such investment, passed back to the investors. This is how a mutual fund works. First an offer document (containing details of the scheme, its investment horizon and class(es) of securities it intends to invest etc.) is issued to the public. Then the collected money is pooled together to constitute a fund. This fund is managed by fund managers of AMC who take major investment decisions. A trust takes care that Continue reading
Types of Debt Mutual Funds
Debt mutual funds are those that predominantly invest in debt securities. Since most debt securities pay periodic interest to investors, these funds are also known as income funds. However, it must be remembered that funds investing in debt products can also offer a growth option to their investors. What is more important is that the portfolio is predominantly made up of debt securities. The universe of debt securities comprises of long-term instruments such as bonds issued by central and state governments, public sector organizations, public financial institutions and private sector companies; and short-term instruments such as call money lending, commercial papers and certificates of deposits and treasury bills. Debt funds tend to create a variety of options for investors by choosing one or more of the segments of the debt markets in their investment portfolio. Liquid Funds And Money Market Funds: These debt funds invest only in instruments with maturities Continue reading
Financial Derivative Types: Swaps
Swap is yet another exciting trading instrument. In fact, it is a combination of forwards by two counter-parties. It is arranged to reap the benefits arising from the fluctuation in the market — either currency market or interest rate market or any other market for that matter. Features of Swap The following are the important features of swap: Basically a forward: A swap is nothing but a combination of forwards. So, it has all the properties of a forward contract discussed above. Double coincidence of wants: Swap requires that two parties with equal and opposite needs must come into contact with each other. As stated earlier, it is a combination of forwards by two counterparties with opposite but matching needs. For instance, the rate of interest differs from market to market and within the market itself. It varies from borrowers to borrowers due to the relative credit worthiness of borrowers. Continue reading
Gold Investment – Meaning and Benefits
Since prehistoric time, human are using the gold in trading and value keeping asset. Even current financial activities are always surrounding by the gold issue. The ancient treated the gold as the true form of wealth. Gold has been using early in 4000 B.C as a fashion decorative object in where today Eastern Europe is centered. In 1500 B.C the gigantic gold-bearing regions of Nubia made Egypt a wealthy nation. By the time the gold has widely recognize as the standard form of medium of exchange for international trade. Gold is represented the royal and honorable in different religious and cultural area. Its aesthetic appearance is the finest ornament above all other metal. Gold play the role in all aspect around us, such as religious customs, reward system, ornament, jewellery, and even the component of industrial product. Gold exist and be using for decade, its intrinsic value is still maintain Continue reading
Learn about Securities Investments – Buying and Selling
Buying Deciding on the proper time to purchase a security that you would like to add to your holdings can be a daunting task. If the price drops immediately after you buy, it may seem as if you missed out on a better buying opportunity. If the price jumps right before you make your move, you may feel as if you paid too much. As it turns out, you should not let these small fluctuations influence your decision too much. As long as the fundamentals that led you to decide on the purchase have not changed, a few points in either direction should not have a large impact on the long-term value of your investment. Similarly, the fact that an investment has been increasing in value of late is not a sufficient reason for you to purchase it. Momentum can be very fickle, and recent movement is not necessarily an Continue reading