Fund of Funds (FOFs)

Fund of Funds (FOFs)

Fund of Funds (FOFs)

Fund of Funds is a type of pooled investment fund that invests in other funds. Its investment strategy is holding a portfolio filled with other funds instead of directly investing in stocks, bonds, and other securities. It is also known as multi-manager investment. They generally invest in other mutual funds or hedge funds. (more…)
Modern portfolio theory

Modern portfolio theory

Modern Portfolio Theory

Modern portfolio theory is an investment theory. It allows the investor to assemble an asset portfolio that will maximize the return for a particular level of risk. The theory assumes investors will prefer less risky portfolios. Modern portfolio theory (MPT) can also be used to construct a portfolio that will minimize ↓ risk for a given level of expected return. Due to the abundance of market data, market risk has attracted significant interest since the 1950s. (more…)
Stop – Loss Order

Stop – Loss Order

Stop – Loss Order

There are three common types of orders. A market order, limit order, and stop-loss order. Market order – Market order is an order to buy or sell a security immediately. This order will not guarantee the execution price but will definitely guarantee the time of execution. It will generally execute at or near the ask or bid price. Limit order – Buying or selling a security at a specific price or better is known as a limit order. Buy limit order and sell limit orders will only be executed at the limit price or higher and limit price or lower respectively. Stop-loss order – It means an order to buy or sell a stock once the price of the stock reaches the specified price, known as the stop price. A stop order becomes a market order when the stop price is reached. (more…)
Commodity-Linked Securities

Commodity-Linked Securities

Commodity-Linked Securities

Investment instruments or securities that are linked to one or more commodity prices are known as commodity-linked securities. These commodity-linked securities provide income to the owner, generally in the form of pay-outs. Like, stocks and bonds, commodities are a class of assets but they are physical products that have uniform quality and are produced in large quantities, for example, cotton, gold, oil, gas, etc. (more…)
Asset-Backed Securities (ABS)

Asset-Backed Securities (ABS)

Asset-Backed Securities (ABS)

A security whose income payments and hence values are derived from and backed by a specified pool of underlying assets are known as Asset-Backed Securities (ABS). An ABS is an investment security consisting of a bond or note that is collateralized by a pool of assets, such as loans, leases, credit card debt, royalties, or receivables. ABS is a pool of loans that are packed and sold to investors as securities through a process known as securitization. This pool is a group of illiquid and small assets that cannot be sold individually. (more…)
Equity market

Equity market

Equity market

An equity market is a market during which shares of companies are issued and traded, either through exchanges or over-the-counter markets. Also referred to as the stock exchange, it's one among the foremost vital areas of a free enterprise, it gives companies access to capital to grow their business, and investors a bit of ownership during a company with the potential to understand gains in their investment supported the company's future performance. (more…)
Value vs Growth Investing

Value v/s Growth Investing

Value v/s Growth Investing

Growth and value investing are two fundamental approaches, or styles, that are used in stock and stock mutual fund investing. Growth investors are those who seek companies that offer strong earnings growth while value investors seek stocks that appear to be undervalued in the marketplace. Since these two styles complement each other, they help in adding diversity to a portfolio when used together. This article will provide you with an overview of Value v/s Growth Investing. (more…)
Structured Investment Vehicle

Structured Investment Vehicle

Structured Investment Vehicle

A structured investment vehicle (SIV) is a type of special-purpose vehicle that purchases long-term bonds and other fixed-income securities and pays for them with short- to medium-term instruments like commercial paper. Citibank founded the first SIV, Alpha Finance Corporation, in 1988, and since then, numerous SIVs have been set up by specialist fund managers and banks.

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Falling Knife

Falling Knife

Falling Knife

Sharp drops in stocks seen during a week’s time are referred to as a ‘Falling knife”. It is a term used to describe a quick drop in the price of a security, such as a stock. It does not have a specific magnitude or duration to drop before a falling knife constitutes. (more…)
Negotiable Certificate of Deposit

Negotiable Certificate of Deposit

Negotiable Certificate of Deposit

Negotiable certificate of deposit (NCD) was introduced in 1961 by the First National City Bank of New York which is now known as Citibank. The instrument allowed the banks to raise funds that could be used for lending. The First National City Bank of New York loaned $10 million in government securities to a New York broker who agreed to accept trades in CD so this created a secondary market in which the NCDs could trade. Participants in the market for NCDs primarily comprise wealthy individuals and institutions such as corporations, insurance companies, mutual funds, and pension funds. Those seeking a return on cash in a low-risk and liquid investment the market attract such investors. (more…)