Category Archives: Finance Wiki

  • Arbitrage

    Posted on December 8, 2016 by Admin in Capital Market, Investment Banking.

    Arbitrage is a prospect to buy a product at low price in one market place and immediately sell it in a different market for a higher price in order to book some profit. An arbitrage opportunity is present when a commodity I available at low price in one market and there are buyers who want […]

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  • Collateralized Debt Obligation (CDO)

    Posted on December 8, 2016 by Admin in Capital Market, Derivatives, Investment Banking.

    Collateralized Debt Obligation (CDO) is a financial product that combines cash flows generated from different underlying loans or debts secured by collaterals and packaged into different tranches in order to sell to different investors or funds.  The tranches in a CDO have different risk level which is mapped with the risk appetite of various investors. […]

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  • Crowd Funding

    Posted on December 8, 2016 by Admin in Finance Article.

    Crowd funding is an exercise of funding a project or idea by raising small amounts of contribution money from a large number of crowd, mostly done through online resources. Crowd funding offers individuals and groups a chance to showcase their ideas, businesses and projects to the world. Every campaign or project has a goal with […]

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  • Ringfencing

    Posted on December 8, 2016 by Admin in Finance Article.

    Ringfencing is a process of separating out company’s assets, profits or business of a particular entity to form a subsidiary for legal, taxation or regulatory purposes. It’s a technique to isolate risks & losses associated with one entity from the rest of the business. Though after ringfencing the company is legally & financially separated with […]

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  • Mergers and Acquisitions (M&A)

    Posted on November 5, 2016 by Admin in Capital Market, Investment Banking.

    Mergers and acquisitions refer to Corporate Finance, Management and Strategy changes related to one company acquiring other company or joining with other company in order to create more business synergy. Companies acquire another small or similar companies in order to improve market share, expand business, improve cost efficiency, improve effectiveness and competitiveness etc. Company’s board […]

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  • Bonus Issue v/s Stock Splits

    Posted on November 5, 2016 by Admin in Capital Market, Investment Banking.

    Below are the key differences between Bonus Issue and Stock Split A bonus issue is additional share issued to the shareholders while Stock split refers to split of existing shares For Bonus issue, reserve fund is converted to equity capital while for split, there is no change in equity capital For Bonus issue face value […]

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  • Corporate Actions

    Posted on November 3, 2016 by Admin in Capital Market, Investment Banking.

    Corporate Action is a process initiated by a publicly traded or listed Company that brings material change to the company affecting all the shareholders which include change in its Name, Securities, strike price etc. Corporate Actions are approved by company’s board of directors and authorized by shareholders. Different types of Corporate Actions: Mandatory Corporate Actions […]

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  • International Swaps and Derivatives Association (ISDA)

    Posted on September 26, 2016 by Admin in Investment Banking.

    International Swaps and Derivatives Association (ISDA) is the trade organization which provides standard for OTC derivatives contracts, applicable product types and different kind of standard master agreement types for derivatives transactions. At the same time, it also manages FPML (Financial products Markup Language) which is nothing but a standard XML message template used by all the […]

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  • Swap Execution Facility (SEF)

    Posted on September 26, 2016 by Admin in Investment Banking.

    A Swap Execution Facility (SEF) is a trade execution platform which provides pre-trade information and other execution mechanism for executing a financial swap trade between two parties or among different parties. Swap Execution Facilities are regulated by the SEC and CFTC in USA under the provisions of Dodd Frank Wall Street reform and consumer protection act (http://crackmba.com/dodd-frank-financial-regulatory-reform-bill/). As per CFTC act, […]

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  • Credit Default Swap (CDS)

    Posted on September 16, 2016 by Admin in Derivatives, Investment Banking.

    A credit default swap (CDS) is an agreement between two parties which are protection seller and protection buyer where the buyer of the CDS makes a series of payments to the seller and in return, receives the amount when the issuers defaults on its pre-agreed payment. In CDS, the credit risk of the issuer is […]

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  • Credit derivatives

    Posted on September 16, 2016 by Admin in Derivatives, Investment Banking.

    A credit derivative is a financial instrument for which the value is derived from the credit risk on an underlying financial asset. These are bilateral contracts between a buyer and seller under which the seller sells protection to the buyer against the credit risk of the underlying asset. A credit event is an event which […]

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  • OTC Derivatives

    Posted on September 15, 2016 by Admin in Derivatives, Investment Banking.

    OTC (Over the Counter) Derivatives are customized and privately negotiated contracts for which the terms and conditions of the contract are mutually decided by the parties involved in the transaction. These contracts are traded and negotiated directly between two parties without being involved with any Exchange – which gives the Over the counter name. OTC […]

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  • Exchange Traded Derivatives

    Posted on September 15, 2016 by Admin in Derivatives, Investment Banking.

    Exchange Traded derivatives (ETD) are kind of derivatives products that are traded via an approved exchange or an intermediary to hedge credit, counterparty and other risks. A derivatives exchange acts as an intermediary to all related transactions, and in turns takes margin deposit from both the buyers and sellers to mitigate credit risk. For ETD, […]

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  • Volcker Rule Reporting Requirements

    Posted on September 14, 2016 by admin in Investment Banking.

    Below seven keys metrics are expected to be reported as a part of Volcker Reporting. These metrics are applicable for all the trading desks. 1. Risk and Position Limits and Usage Define the amount of risks that any trading desk is allowed to take. This risk cap can be different for different trading desks Risk […]

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  • Volcker Rule

    Posted on September 14, 2016 by admin in Investment Banking.

    The Volcker Rule, named after the former Federal Reserve Chairman Paul Volcker, was a part of the famous Dodd Frank act which was passed in response of the 2008 financial crisis in order to avoid any such financial crisis in future. The bill requires all the investment banks coming under Volcker rule to mandatorily comply […]

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