The corporate veil refers to the legal separation between a company and its owners (shareholders) or directors. This separation grants the company a distinct legal personality, shielding its stakeholders from personal liability for the company’s actions. However, there are instances where the courts may disregard this separation and pierce the corporate veil. Lifting the Corporate […]
Stock market indicators are crucial tools that provide insights into the overall health and performance of financial markets. Investors use these indicators to make informed decisions, assess market trends, and formulate investment strategies. Understanding the computation methods and implications of key stock market indicators is essential for navigating the dynamic world of investments. 1. BSE […]
Buying on margin is a financial strategy that allows investors in the Indian stock market to leverage borrowed funds for larger investments, potentially amplifying returns but also increasing risks. As investors navigate this strategy, it’s crucial to delve into the key components, implications, and considerations specific to the Indian context. Key Components: Margin Trading Facility […]
Short selling is a trading strategy where an investor sells borrowed securities with the anticipation that the market value of the securities will decline. The strategy involves a series of steps, including borrowing shares, selling them in the market, waiting for the price to fall, repurchasing the shares at a lower price, and returning them […]
Market structures refer to the organizational characteristics of a market, including the number and size of firms, the nature of the products sold, and the ease of entry and exit. The four primary types of market structures are: 1. Perfect Competition: Perfect competition is an idealized market structure where a large number of small firms […]
Money market instruments are short-term, highly liquid financial assets that serve as a means for governments, financial institutions, and corporations to manage their short-term funding needs and for investors to park their funds in low-risk, easily tradable instruments. These instruments play a crucial role in the broader financial system by providing avenues for short-term borrowing, […]
Let’s elaborate on each of the three theories: Liquidity Premium Theory, Expectations Theory, and Market Segmentation Theory. 1. Liquidity Premium Theory: Key Concept: The Liquidity Premium Theory is a framework within the term structure of interest rates that suggests investors require compensation, known as the liquidity premium, for holding longer-term securities compared to shorter-term ones. […]
The term structure of interest rates, also known as the yield curve, is a vital concept in finance that illustrates the relationship between the interest rates and the time to maturity of debt securities with similar risk profiles. This curve provides a snapshot of prevailing interest rates for different maturity periods, guiding investors and analysts […]
In India, as in any other economy, interest rates are influenced by a variety of economic forces. These forces reflect the broader economic conditions, monetary policy decisions, and global factors. Let’s elaborate on the economic forces affecting interest rates in India: Monetary Policy by the Reserve Bank of India (RBI): Inflation Rate: Government Borrowing: Global […]
The Loanable Funds Theory is an economic theory that explores the interaction between the supply and demand for loans in a financial market. It is a key concept in macroeconomics and helps explain the interest rate determination in the financial system. The theory is based on the premise that the interest rate is the price […]