Investment - Introduction to Derivatives Contracts
Investment - Introduction to Derivatives Contracts When you plan a vacation, you do not normally wait until you reach to your chosen destination to book a lodging. Booking a hotel room in advance provides certainty that a room will be available and lock
Investment - Comparing Equity and Debt Securities
Investment - Comparing Equity and Debt Securities There are considerable risk and return disparities between debt and equity instruments due of differences in cash flows, voting rights, and priority of claims. Risk Debt securities are the least danger
Investment - Forwards and Futures
Investment - Forwards and Futures Forwards and futures involve duties in the future on the part of both parties to the contract. Forward and futures contracts are frequently termed forward commitments or bilateral contracts because both parties have an ob
Investment - Functions of Derivative Contracts
Investment - Functions of Derivative Contracts Uses of Derivatives Contracts Derivatives can be established on any asset, event, or outcome, which is called the underlying. The underlying can be a physical item, such as wheat or gold, or a financial a
Investment - Swap Contracts
Investment - Swap Contracts Swap contracts, or swaps, are often derivatives in which two parties exchange (swap) cash flows or other financial instruments across numerous periods (months or years) for mutual gain, usually to control risk. Swaps of this
Investment - Private Equity
Investment - Private Equity Consider an entrepreneur who set up her new business five years ago. Back then, she went to her friends and neighbours for the money she needed. Now, five years later, her company is incredibly profitable. To raise the additio
Investment - Option Contracts
Investment - Option Contracts What if the farmer does not want to lock in the price because the farmer feels the price of wheat is going to increase? But the farmer does want to make sure that at least a certain amount is obtained for the wheat. Similarly
Investment - Introduction to Alternative Investments
Investment - Introduction to Alternative Investments If a public company needs funds to invest in a project, say to establish a new manufacturing facility or to extend its operations abroad, it may turn to the financial markets and issue the forms of deb
Investment - Types of Bonds
Investment - Types of Bonds Fixed-Rate Bonds Fixed-rate bonds are the major type of debt securities issued by enterprises and governments. A fixed-rate bond has a defined life that ends on the bond’s maturity date, has a coupon rate that does not change
Investment - Bond Seniority Ranking
Investment - Bond Seniority Ranking The bond indenture offers bondholders the right to take legal action if the issuer fails to fulfill the promised payments or fails to satisfy other requirements mentioned in the contract. If the bond issuer fails to m