Definition: The term "Indirect Investing" describes the process of investing money in a portfolio of bundled securities through an intermediary. In simple words, these are third-party investments made through intermediaries. Investors who resist investing directly in the stock market opt for this type of investing. They prefer investing in funds owned and managed by … [Read more...] about Indirect Investing
Investment
Investment Decision
Investment Decision is a part of Financial Management which deals with the allocation of the company's valuable funds into investment projects or potential assets. It involves identifying such projects or assets to invest in and generate returns from them. Besides, these decisions significantly affect the profitability and stability of the firm. Some essential … [Read more...] about Investment Decision
Capital Rationing
Definition: Capital rationing is a financial approach applied by the organizations to pick the utmost profitable projects out of all the investment opportunities available. It enables the organizations to determine an optimal capital budgeting and adequate capital expenditure, in the long run. This a useful practice since the organizations usually have limited availability … [Read more...] about Capital Rationing
Hedging
Definition: Hedging means limiting something by certain conditions in general terms; however, in financial terminology, hedging is a process of protecting oneself against any loss in investment, i.e., it is a method of using market instrument tactically to compensate any unfavourable movements of prices, or we can say the investor hedge one investment by hedging … [Read more...] about Hedging
Securitization
Definition: Securitization is the method of converting the receivables of the financial institutions, i.e., loans and advances, into bonds which are then sold to the investors. In simple terms, it is the means of turning the illiquid assets into liquid assets to free up the blocked capital. The receivables on debts against collateral assets like property, land, building and … [Read more...] about Securitization
Target-Date Fund (TDF)
Definition: A target-date fund (TDF) is a long-term investment plan comprising of equity, bonds and various other fixed-income securities, where this asset allocation rebalance with the declining risk-taking capacity of the investor while moving towards the target date. These investment plans are also termed as lifecycle funds since it keeps on rebalancing while heading … [Read more...] about Target-Date Fund (TDF)
Zero-Coupon Bond
Definition: A zero-coupon bond, as the name suggests, it is a financial instrument which does not allow a regular interest payment to the investor. Moreover, it is a bond which is issued at a meagre market price (discounted price) in comparison to its face value. And it is redeemable on or after a specified maturity date at the par value itself. It is known by many names … [Read more...] about Zero-Coupon Bond
Venture Capitalist Vs Angel Investor
When we think of startup funding, we encounter the two very similar but incredibly different types of lenders, i.e., venture capitalist and angel investor. The significant dissimilarity between the two is that the former is a venture capital firm which invests the money of its customers. Whereas, the latter is an individual who is financially well versed and use his/her own … [Read more...] about Venture Capitalist Vs Angel Investor
Commercial Paper (CP)
Definition: A commercial paper (CP) can be viewed as an unsecured, short-term and negotiable money market instrument. It is issued by the companies with good credit rating to acquire quick working capital to meet its short-term liabilities like paying off bills or maintaining inventory. The issuing company promises to repay the borrowed sum on or before the mentioned maturity … [Read more...] about Commercial Paper (CP)
Blue Chip Stocks
Definition: Blue chip stocks are the secured, stable and less volatile shares of those reputed and well-established companies which have huge market capitalization. These entities are considered to be industry leaders. Example; some of the high valued blue chip stocks are Bosch Ltd., Maruti Suzuki India Ltd. and Bajaj Finance Ltd. What are Blue Chip Companies? Blue chip … [Read more...] about Blue Chip Stocks