Investment Terms

Basics of Commodity Futures Markets

Futures markets have been described as continuous auction markets and as clearing houses for the latest information about supply and demand. They are the meeting places of buyers and sellers of an ever-expanding list of commodities that today includes agricultural products, metals, petroleum, financial instruments, foreign currencies and stock indexes. Trading   has also being imitated in   future contracts , enabling   option buyers to participate in future market with known risks. In other words Futures markets have been described as continuous auction market and as a clearing house for the latest information about supply and demand.

Participants in Future Market

The following are the participant in future market which are as follows:

  • Hedgers: Hedgers are individuals and firms that makes purchases and sales in the future market   solely for the purpose   of establishing   a known price level —weeks or month in advance   -for something   they later intended to buy and sell in the cash market in this way   they attempt to protect   themselves   against   the risk of unfavorable price change   in the interim.
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Commodity Markets and Futures Trading

The process of trading commodities is also known as futures trading. Futures Contracting is an important activity for any economy to meet raw material requirements, to facilitate storage as a profitable economic activity and also to manage supply and demand risk, forward contracts gives rise to price risk, so to the need of price risk management, unlike other kinds of investments, such as stocks and bonds, when investor trade futures, he/she do not actually buy anything or own anything. He/she are speculating on the future direction of the price in the commodity in which they are trading. This is like a bet on future price direction.… Read the rest

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Claims in Insurance and Claims Management

Claims in Insurance

Definition of claims: Claim is a right of insured to receive the amount secured under the policy of insurance contract promised by Insurer.

An insurance claim is the actual application for benefits provided by an insurance company. Policy holders must first file an insurance claim before any money can be disbursed to the hospital or repair shop or other contracted service. The insurance company may or may not approve the claim, based on their own assessment of the circumstances. Individuals who take out home, life, health, or automobile insurance policies must maintain regular payments called premiums to the insurers.… Read the rest

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Financial Derivative Types: Swaps

Swap is yet another exciting trading instrument. In fact, it is a combination of forwards by two counter-parties. It is arranged to reap the benefits arising from the fluctuation in the market — either currency market or interest rate market or any other market for that matter.

Features of Swap

The following are the important features of swap:

  • Basically a forward: A swap is nothing but a combination of forwards. So, it has all the properties of a forward contract discussed above.
  • Double coincidence of wants: Swap requires that two parties with equal and opposite needs must come into contact with each other.
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Major Characteristics of Investments

Certain features characterize all investments. The following are the main characteristics of investments:

1.Return:  All investments are characterized by the expectation of a return. In fact, investments are made with the primary objective of deriving a return. The return may be received in the form of yield plus capital appreciation. The difference between the sale price & the purchase price is capital appreciation. The dividend or interest received from the investment is the yield. Different types of investments promise different rates of return. The return from an investment depends upon the nature of investment, the maturity period & a host of other factors.… Read the rest

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Definition of Investment and it’s basic classification

What is investment?

Investment is the activity, which is made with the objective of earning some sort of positive returns in the future. It is the commitment of the funds to earn future returns and it involves sacrificing the present investment for the future return. Every person makes the investment so that the funds he has increases as keeping cash with himself is not going to help as it will not generate any returns and also with the passage of time the time value of the money will come down. As the inflation will rise the purchasing power of the money will come down and this will result that the investor who does not invest will become more   poor as he will not have any funds whose value have been increased.… Read the rest

Abey Francis
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