What is derivative?
In a layman’s language, derivative means profit or loss derived from something. The most common derivative instruments used in financial markets are the forward contract, options, forward rate agreement, futures contract, interest rate swaps etc. The characteristic and value of these derivative instruments are derived from underlying assets like currencies, Interest rates, stocks indices, precious…
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Characteristics & Functions of Derivatives
Derivatives are financial contracts that derive their value from an underlying asset. These contracts play a significant role in the financial markets and exhibit several key characteristics and functions. Characteristics of Derivatives Hedging Hedging involves purchasing one asset to reduce the risk of loss associated with another asset. In finance, this risk management technique focuses…
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Highlights of Union Budget 2025
In today’s Budget 2025 presentation, Finance Minister Nirmala Sitharaman announced several development measures across six key areas, focusing on the poor, youth, farmers, and women. Key Focus Areas Major Announcements on Taxation, Business Growth, Infrastructure, and Fiscal Policies To know the tax slabs for FY 2025-26, read: “NO INCOME TAX ON INCOME UP TO ₹12…
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Options: What are In the Money-ITM and Out of the Money-OTM?
Options are contracts through which a seller gives a buyer the right, but not the obligation, to buy or sell a specified asset (Ex: Foreign currency, shares, equities, commodities etc.) at a predetermined price, by a certain date. It means they acquire or dispose of the underlying asset at that price called the strike price.…
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Understanding Rights Debentures for Working Capital
A “right debenture” is a form of convertible debenture, granting the holder additional rights beyond just receiving interest payments. It allows the holder to convert the debenture into a certain number of shares of the issuing company at a predetermined price within a specific timeframe, essentially giving them the option to become part-owners of the…
Govt Announces ₹100 Cr Credit Guarantee Scheme for MSMEs (MCGS-MSME)
The Government of India has introduced the Mutual Credit Guarantee Scheme for MSMEs (MCGS-MSME) to enhance access to credit for Micro, Small, and Medium Enterprises (MSMEs). The scheme provides a 60% guarantee coverage through the National Credit Guarantee Trustee Company Limited (NCGTC) to Member Lending Institutions (MLIs) for credit facilities up to ₹100 crore. Key…
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