Debt

OPEN MARKET OPERATIONS Often, we come across the term called ‘OMO’. What is OMO? An Open Market Operation (OMO) is the buying and selling of government securities in the open market. It is done by the Reserve Bank of India. When there is excess liquidity in the market, the RBI intervenes and sucks it out […]

Debt Equity Ratio In life we should be grateful to all those who have helped us in making us what we are. So, who are these people we need to be indebted to? They are our teachers, mentors, leaders etc. who light up the path that we tread upon. We owe them our success. And

Significance of Yield in Bond Market Bond yield is the return an investor realizes on a bond. The bond yield can be defined in different ways. Setting the bond yield equal to its coupon rate is the simplest definition. The current yield is a function of the bond\’s price and its coupon or interest payment, which will be more accurate than the coupon yield if

BOND LADDERING Bond investing is much like a game of musical chair in which bond prices move to the tune of interest rates. Sometimes you might feel that you have no control over what happens to your bond portfolio with the future movements in interest rates. But familiarity with ‘bond laddering’, an investment strategy, could

CREDIT SPREADS A credit spread refers to the difference in interest rates between a corporate bond and a comparable Government bond. Assume that the interest rate on a five-year corporate bond is 6 per cent and that on a similar five-year Government bond is 5 per cent. This means that the interest on a corporate

WHAT IS COUPON…? The term \”coupon\” is derived from the historical use of actual coupons for periodic interest payment collections. The coupon rate is the interest rate paid on a bond by its issuer for the term of the security. ZERO COUPON BOND Zero coupon bonds is a bond that is issued at a discounted

What Is Debt…? Debt is an amount of money borrowed by one party from another. Debt is used by many corporations and individuals as a method of making large purchases that they could not afford under normal circumstances. A debt arrangement gives the borrowing party permission to borrow money under the condition that it is

Duration Management Debt funds invest in debt papers which need to give good fixed returns & be of good quality. Based on the interest rate outlook, the fund manager decides whether to invest in long duration papers or short duration papers.   But how is his decision of selecting long duration papers or short duration

Commercial Paper & Treasury Bill A Commercial Paper (CP) is an unsecured, short-term debt instrument issued by a Corporation, in the form of promissory note or in dematerialised form, typically for meeting short-term liabilities. COMMERCIAL PAPER A Commercial Paper (CP) is A money-market instrument Issued by corporates and Financial Institutions To garner money from the

Certificate of Deposits CDs or Certificates of Deposits are Financial Instruments. CERTIFICATES OF DEPOSIT What do CDs actually mean? Who issues them?? Who subscribes to them??? CERTIFICATES OF DEPOSIT Sunil wishes to borrow Rs. 40 Lakhs for his new business venture. He goes to his bank to ask for a loan. But though the bank