Banking Structure in India

Banking Regulator
The Reserve Bank of India is

• The central banking and monetary authority of India
• The regulator and supervisor of commercial banks

Scheduled Banks in India
Scheduled banks comprise scheduled commercial banks and scheduled co-operative banks.

• Scheduled commercial banks form the bedrock of the Indian financial system, currently accounting for more than three-fourths of all financial institutions’ assets.
• SCBs are present throughout India, and their branches, having grown more than four-fold in the last 40 years now number more than 80,500 across the country.

Public Sector Banks

• Public sector banks are those in which the majority stake is held by the Government of India.
• Public sector banks together make up the largest category in the Indian banking system.
• There are currently 27 public sector banks in India.
• They include the SBI and its 6 associate banks, 19 nationalized banks and IDBI Bank Ltd.
• Public sector banks have taken the lead role in branch expansion, particularly in the rural areas.
• Public sector banks account for bulk of the branches in India (88 percent in 2009).
• In the rural areas, the presence of the public sector banks is overwhelming; in 2009,
• 96 percent of the rural bank branches belonged to the public sector.

Regional Rural Banks

• Regional Rural Banks (RRBs) were established during 1976-1987 with a view to develop the rural economy.
• Each RRB is owned jointly by the Central Government, concerned State13 Government and a sponsoring public sector commercial bank.
• RRBs provide credit to small farmers, artisans, small entrepreneurs and agricultural laborers.
• Over the years, the Government has introduced a number of measures of improve viability and profitability of RRBs, one of them being the amalgamation of the RRBs of the same sponsored bank within a State. This process of consolidation has resulted in a steep decline in the total number of RRBs to 86 as on March 31, 2009, as compared to 196 at the end of March 2005.

 Private Sector Banks

• In this type of banks, the majority of share capital is held by private individuals and corporate.
• Not all private sector banks were nationalized in 1969, and 1980.
• The private banks which were not nationalized are collectively known as the old private sector banks and include banks such as The Jammu and Kashmir Bank Ltd., Lord Krishna Bank Ltd etc.
• As at end March, 2009 there were 7 new private sector banks and 15 old private sector

Foreign Banks

• Foreign banks have their registered and head offices in a foreign country but operate their branches in India.
• The RBI permits these banks to operate either through branches; or through wholly-owned subsidiaries.
• The primary activity of most foreign banks in India has been in the corporate segment.
• However, some of the larger foreign banks have also made consumer financing a significant part of their portfolios.
• These banks offer products such as automobile finance, home loans, credit cards, household consumer finance etc.
• Foreign banks in India are required to adhere to all banking regulations, including priority-sector lending norms as applicable to domestic banks.
• Some of the existing private sector banks, which showed signs of an eventual default, were merged with state owned banks.
• It may be noted that two important erstwhile developmental financial institutions, viz. Industrial Development Bank of India (IDBI) and Industrial Credit and Investment Corporation of India (ICICI) converted themselves into commercial banks after the new bank licensing policy was announced in July 1993.
• In addition, a foreign institution could also invest up to 74% in domestic private bank, in which up to 49% can be via portfolio investment.
• At the end of June 2009, there were 32 foreign banks with 293 branches operating in India.
• Besides, 43 foreign banks were operating in India through representative offices.
• Under the World Trade Organization (WTO) Agreement, RBI allows a minimum 12 branches of all foreign banks to be opened in a year.

Co-operative Banks

• Co-operative banks cater to the financing needs of agriculture, retail trade, small industry and self-employed businessmen in urban, semi-urban and rural areas of India.
• A distinctive feature of the co-operative credit structure in India is its heterogeneity.
• The structure differs across urban and rural areas, across states and loan maturities.
• Urban areas are served by urban cooperative banks (UCBs), whose operations are either limited to one state or stretch across states.
• The rural co-operative banks comprise State co-operative banks, district central cooperative banks, SCARDBs and PCARDBs.
• The co-operative banking sector is the oldest segment of the Indian banking system. The network of UCBs in India consisted of 1721 banks as at end-March 2009, while the number of rural co-operative banks was 1119 as at end-March 2008.
• Owing to their widespread geographical penetration, cooperative banks have the potential to become an important instrument for large-scale financial inclusion, provided they are financially strengthened.
• The RBI and the National Agriculture and Rural Development Bank (NABARD) have taken a number of measures in recent years to improve financial soundness of co-operative banks.

Tips for Maths Question Paper

IBPS exam tests one thing to the core – Candidate’s time management skills. This has been proved both in IBPS PO as well as IBPS Clerical Exam. Time Management is a critical thing for IBPS Bank Exams. “How do we manage the time and finish the paper on time?” – one good question asked by all candidates who take up the IBPS exam. Maths or quantitative aptitude part consumes lot of time. We will hardly find maths questions without multiplication and division. Here we have come up with short cut method for percentage calculation:

How to find 2.5 percent of a number?

•     Choose a number (start with 2 digits and advance to 3 with practice).
•     Divide by 4 (or divide twice by 2).
•     Move the decimal point one place to the left.

Example:

•     If the number selected is 110:
•     Divide 110 by 4: 110/4 = 27.5
•     Move the decimal point one place to the left :  2.75
•     So, 2.5% of 110 = 2.75.

How to find 5% of a number?

•     Choose a large number (or sum of money).
•     Move the decimal point one place to the left.
•     Divide by 2 (take half of it).

Example:

•     If the amount of money selected is Rs.850:
•     Move the decimal point one place to the left.: 85
•     Divide by 2: 85/2 = 42.50
•     So 5% of Rs.850 = Rs.42.50.

How to find 15% of a number?

•     Choose a 2-digit number.
•     Multiply the number by 3.
•     Divide by 2.
•     Move the decimal point one place to the left.

Example:

•     If the number selected is 43:
•     Multiply by 3: 3 × 43 = 129
•     Divide by 2: 129/2 = 64.5
•     Move the decimal point one place to the left: 6.45
•     So 15% of 43 = 6.45

How to find 20 percent of a number?

•     Choose a 2-digit number.
•     Divide the number by 5.

Example:

•     If the number selected is 38:
•     Divide by 5: 38/5 = 7.6
•     So 20% of 38 = 7.6

How to find 25 percent of a number

•     Divide by 4.

Example:

•     If the number selected is 86:
•     Divide 86 by 4: 86/4 = 21.5
•     So 25% of 86 = 21.5.

How to find 33 1/3 percent of a number

•     Choose a number.
•     Divide the number by 3.

Example:

•     If the number selected is 74
•     Divide by 3: 74/3 = 24 2/3
•     So 33 1/3% of 74 = 24 2/3

How to find 40 percent of a number

•     Choose a 2-digit number.
•     Multiply the number by 4.
•     Move the decimal point one place to the left.

Example:

• If the number selected is 21:
• Multiply by 4: 4 × 21 = 84
• Move the decimal point one place to the left: 8.4.
• So 40% of 21 = 8.4.

How to find 45 percent of a number

• Choose a 2-digit number.
• Multiply the number by 9.
• Divide by 2.

Move the decimal point one place to the left.
Example:

•     If the number selected is 36:
•     Multiply by 9: 9 × 36 = 270 + 54 = 324
•     Divide by 2: 324/2 = 162
•     Move the decimal point one place to the left: 16.2
•     So 45% of 36 = 16.2.

IBPS PO Recruitment 2012 through 2nd Common Written Exams

Did not Succeed in IBPS PO Exam 2011, don't Worry, IBPS PO Exam 2012 is round the corner.

After the Declaration of IBPS PO Results on 12th December 2012,the fate of almost 10 lakh students was decided.But do you think that one exam alone can decide your fate and suppose that if you are not selected in this exam why lose hope and say bye bye to banking career.Although we don't have exact figures about How many students have passed the IBPS PO Exam 2011,but only bunch of students have been declared qualified in the exam.So don't Lose hope and attempt the Upcoming IBPS PO Exam in 2012 with double effort

If you are new to this page and  appeared in the IBPS PO Exam 2011 then you must read our previous post on My IBPS CWE PO Result 2011 is out-Now What  to do next ?  ,but if you have not appeared in the IBPS PO Exam 2011 and looking for Upcoming IBPS PO Recruitment 2012,then you will find some thing interesting below. 

IBPS PO Recruitment 2012: We have been asked this question many times When IBPS is going to conduct the Next Common Written Exam for Probationary Officers?.The answer to this question can be answered by IBPS alone,although we have got some probable information  related to the upcoming IBPS PO Exam in 2012.The probable information is that IBPS PO Recruitment 2012 notification is expected in the first week of February.Although there is no official word yet on the announcement of IBPS PO Recruitment 2012,but it is expected to be published in the February 2012.

Students who would like to appear for the Upcoming IBPS PO Exam in 2012 must check this page regularly for any updated information related to IBPS PO Recruitment 2012.The IBPS Notification 2012 will be published in the Employment News paper and can be downloaded from the IBPS Official Website.Whenever IBPS will publish the Notification we will always update this page and provide you the complete information (including pdf) containing the actual advertisement.

IBPS CWE Cut Off Marks 2011 for Probationary Officers (PO)

The IBPS Common Written Exam (CWE) for Probationary Officers(PO) concluded in two sessions on 18th September 2011. Hence we are discussing the cutoff marks in each paper and for overall exam for morning session and evening session. The Cutoff Score generally depends on the following items.


(1) The average marks in each paper at National Level.
(2) The total number of candidates appeared to the examination.
(3) The relative difficulty/easiness of each paper.


The experts (Various Institute Directors and Senior faculty) expressed their opinion on CUT OFF MARKS as follows. Cutoff Marks are very important as IBPS issue score cards only to those candidates who qualify in each paper.


(1) Reasoning  22-27 marks
(2) English Language 12-18 marks
(3) Quantitative Aptitude 21-26 marks
(4) General Awareness  25-30 marks
(5) Computer Knowledge 25-30 marks
(6) Descriptive Paper 10-15 marks


The Viewers are invited to express paper wise their expected marks, cut off marks, their doubts & questions on answers & solutions of IBPS Common Written Exam for PO in each paper.

How to Improve English Knowledge Methods and Tips!

As we know in today`s world life has become so dynamic that one needs to change as per the circumstances nearby him which is occurring day by day so as to keep himself upgraded in track of development .  It is said that 32 dialects are used by the Indians and over 12000 types of languages are spoken in India by its people. So India has got innumerable languages in its culture that it is difficult to understand one`s language the north Indian find it difficult to understand the language of a south Indian similarly it is difficult for a Bengali to communicate with a Kashmiri as both are  unaware of each other’s language. So in this case the only language which comes to aide, to remove the language barrier of one is none other than English. English is the only language which is generally accepted by the whole world as giving it as a tag of officially accepted and recognized language throughout the world. English thus has gained a lot of popularity in the whole world by the booming of the IT and BPO sectors in nations of the world.

We all know that English is must nowadays to success in interview, exams etc. So you have to well versed in English language whether in writing or in speaking. Ya, it is difficult for those who studied in regional medium language schools. But it should not be excuse for your failure because there are lots of people who studied in regional medium but now they are more efficient in English language than English medium school student. Its all depend on your interest or passion to learn something. We are here sharing tips to learn English language. Please also share your comments which are you perfect or interested method to learn English language. Best of luck!!



Here are some tips to enhance English knowledge are as stated below

Proper Knowledge of English Language- In order to enhance the skills of English one should go through the books of standard 12 of grammars so it will provide the vital knowledge of noun, pronoun adjectives and so many much more it will teach the individual about the proper usage of grammar in English which are widely used in common day to day language and thus it will also make the base of an individual too much strong in English. As it deals with the fundamentals of English recommended books is of ray & martin.

English Newspaper, Novels and Journals

Thorough and daily reading of newspaper, novel, journals and magazine helps an individual a lot in understanding and framing of a language and it becomes easy for him to perceive the language of English and thus he can master them if done regularly. And reading helps him in cracking so many entrance exams which were difficult for him in past but now its easy for him. Thus his knowledge of GK and interview increases.               NEWS CHANNELS- watching and following of English news channels helps a lot in increasing the vocabulary of an individual. It also helps in getting the pronunciations       right by watching the debate shows which are telecast on English news channels recommended channels BBC, CNN, etc.

Group Discussion

its better to use the language of English in normal discussion of a topic in which one individual is talking about in general with his friends or colleagues with whom one interacts its good to use the language in daily topics which will help him in understanding the frame , usage, of language and thus he will attain the position of articulate person.

PRACTICE

It is said that practice makes a man perfect and it’s true. It is said that if one needs to improve himself he should do it on a regular basis of 21 days after that it will become his habit to do that particular work on time and this is the only one way to achieve its goal and conquering his fears and thus he can easily perceive the language (English) for which he is doing the hard work so one needs to read, write, and speak English regularly so in order to attain masterism.

Tips to Minimize Negative Marks in Bank Exams

The candidates who are taking their bank exam for their first times are more worried about their negative marks. Negative marks in the bank exam are rewarded to each and every one for every wrong answer, which starts with 0.25 to 0.50. So the candidates always try to minimize their negative marks as if they not then these negative marks will lead them to failure. Here we will discuss about the topic on how to minimize negative marking in bank exams. Here are some of the tips on how to minimize negative marking in the bank exam:

Study previous years question paper

Studying the previous year question paper will help you to get information about how the questions are given in the bank exam, the format of question paper; the pattern of question paper etc. will help you in your bank exam. By reading the previous question paper you will also came to know that which part of question will take how must time to solve in this way you can also be able to utilize the correct time. www.jagronjosh.com is a very good website to check previous and current year question paper with solved answer.


Practice the previous question papers

Practice makes a man perfect so keep practicing the previous question papers. As all the banks want that the candidate should complete 120-150 questions in 3 hours, it being essential for the applicants to figure out short cut method, easy problem skill so that the candidate could save their precious time. This could only be done by practicing the papers.

Go for the mock test papers!

The best idea is to spend some time in solving out the mock test papers as they act as a guide to the candidates for understanding the exact criteria of the examiners. Mock test papers provide an overview of what the paper in actual is likely to be and hence, candidates get a proper practice session before going down for a big shot.

Reduce swaying answers

The most pathetic condition is found when a candidate answers the questions on a random basis where he or she has no idea of the answer is really hinting about, hence, it creates a negative image of the candidate and the examiners carelessly goes through the paper and provides whatever marks as he thinks to be fit. Swaying of answer can sometimes also in form of answering the questions in random orders which creates a lot of confusion in the minds of the examiner and irritates him all the way.

The ideal solution

The ideal solution to reduce the negative marks in your paper is to be very precise in approach which allows the examiner to understand your position properly and even if the paper is not well answered, the examiner will believe that the candidate has a fair approach and his answers are not vague. Keep the answers simple and if you do not have any idea about a particular answer, well leaver it blank, the examiner will think that the candidate answers only those of which he knows and it will create a positive image.

BANKING TERMINOLOGY FOR BANK PO/CLERK BANKING AWARNESS Question paper 2011

•  Accrued interest: Interest due from issue date or from the last coupon payment date to the settlement date. Accrued interest on bonds must be added to their purchase price.

• Arbitrage: Buying a financial instrument in one market in order to sell the same instrument at a higher price in another market.

• Ask Price: The lowest price at which a dealer is willing to sell a given security.

• Asset-Backed Securities (ABS): A type of security that is backed by a pool of bank loans, leases, and other assets. Most ABS are backed by auto loans and credit cards – these issues are very similar to mortgage-backed securities.

• At-the-money: The exercise price of a derivative that is closest to the market price of the underlying instrument.

• Basis Point: One hundredth of 1%. A measure normally used in the statement of interest rate e.g., a change from 5.75% to 5.81% is a change of 6 basis points.

• Bear Markets: Unfavorable markets associated with falling prices and investor pessimism.

• Bid-ask Spread: The difference between a dealer’s bid and ask price.

• Bid Price: The highest price offered by a dealer to purchase a given security.

• Blue Chips: Blue chips are unsurpassed in quality and have a long and stable record of earnings and dividends. They are issued by large and well-established firms that have impeccable financial credentials.

• Bond: Publicly traded long-term debt securities, issued by corporations and governments, whereby the issuer agrees to pay a fixed amount of interest over a specified period of time and to repay a fixed amount of principal at maturity.

• Book Value: The amount of stockholders’ equity in a firm equals the amount of the firm’s assets minus the firm’s liabilities and preferred stock

• Broker: Individuals licensed by stock exchanges to enable investors to buy and sell securities.

• Brokerage Fee: The commission charged by a broker.

• Bull Markets: Favorable markets associated with rising prices and investor optimism.

• Call Option: The right to buy the underlying securities at a specified exercise price on or before a specified expiration date.

• Callable Bonds: Bonds that give the issuer the right to redeem the bonds before their stated maturity.

• Capital Gain: The amount by which the proceeds from the sale of a capital asset exceed its original purchase price.

• Capital Markets: The market in which long-term securities such as stocks and bonds are bought and sold.

• Certificate of Deposits (CDs): Savings instrument in which funds must remain on deposit for a specified period, and premature withdrawals incur interest penalties.

• Closed-end (Mutual) Fund: A fund with a fixed number of shares issued, and all trading is done between investors in the open market. The share prices are determined by market prices instead of their net asset value.

• Collateral: A specific asset pledged against possible default on a bond. Mortgage bonds are backed by claims on property. Collateral trusts bonds are backed by claims on other securities. Equipment obligation bonds are backed by claims on equipment.

• Commercial Paper: Short-term and unsecured promissory notes issued by corporations with very high credit standings.

• Common Stock: Equity investment representing ownership in a corporation; each share represents a fractional ownership interest in the firm.

• Compound Interest: Interest paid not only on the initial deposit but also on any interest accumulated from one period to the next.

• Contract Note: A note which must accompany every security transaction which contains information such as the dealer’s name (whether he is acting as principal or agent) and the date of contract.

• Controlling Shareholder: Any person who is, or group of persons who together are, entitled to exercise or control the exercise of a certain amount of shares in a company at a level (which differs by jurisdiction) that triggers a mandatory general offer, or more of the voting power at general meetings of the issuer, or who is or are in a position to control the composition of a majority of the board of directors of the issuer.

• Convertible Bond: A bond with an option, allowing the bondholder to exchange the bond for a specified number of shares of common stock in the firm. A conversion price is the specified value of the shares for which the bond may be exchanged. The conversion premium is the excess of the bond’s value over the conversion price.

• Corporate Bond: Long-term debt issued by private corporations.

• Coupon: The feature on a bond that defines the amount of annual interest income.

• Coupon Frequency: The number of coupon payments per year.

• Coupon Rate: The annual rate of interest on the bond’s face value that a bond’s issuer promises to pay the bondholder. It is the bond’s interest payment per dollar of par value.

• Covered Warrants: Derivative call warrants on shares which have been separately deposited by the issuer so that they are available for delivery upon exercise.

• Credit Rating: An assessment of the likelihood of an individual or business being able to meet its financial obligations. Credit ratings are provided by credit agencies or rating agencies to verify the financial strength of the issuer for investors.

• Currency Board: A monetary system in which the monetary base is fully backed by foreign reserves. Any changes in the size of the monetary base has to be fully matched by corresponding changes in the foreign reserves.

• Current Yield: A return measure that indicates the amount of current income a bond provides relative to its market price. It is shown as: Coupon Rate divided by Price multiplied by 100%.

• Custody of Securities: Registration of securities in the name of the person to whom a bank is accountable, or in the name of the bank’s nominee; plus deposition of securities in a designated account with the bank’s bankers or with any other institution providing custodial services.

• Default Risk: The possibility that a bond issuer will default ie, fail to repay principal and interest in a timely manner.

• Derivative Call (Put) Warrants: Warrants issued by a third party which grant the holder the right to buy (sell) the shares of a listed company at a specified price.

• Derivative Instrument: Financial instrument whose value depends on the value of another asset.

• Discount Bond: A bond selling below par, as interest in-lieu to the bondholders.

• Diversification: The inclusion of a number of different investment vehicles in a portfolio in order to increase returns or be exposed to less risk.

• Duration: A measure of bond price volatility, it captures both price and reinvestment risks to indicate how a bond will react to different interest rate environments.

• Earnings: The total profits of a company after taxation and interest.

• Earnings per Share (EPS): The amount of annual earnings available to common stockholders as stated on a per share basis.

• Earnings Yield: The ratio of earnings to price (E/P). The reciprocal is price earnings ratio (P/E).

• Equity: Ownership of the company in the form of shares of common stock.

• Equity Call Warrants: Warrants issued by a company which give the holder the right to acquire new shares in that company at a specified price and for a specified period of time.

• Ex-dividend (XD): A security which no longer carries the right to the most recently declared dividend or the period of time between the announcement of the dividend and the payment (usually two days before the record date). For transactions during the ex-dividend period, the seller will receive the dividend, not the buyer. Ex-dividend status is usually indicated in newspapers with an (x) next to the stock’s or unit trust’s name.

• Face Value/ Nominal Value: The value of a financial instrument as stated on the instrument. Interest is calculated on face/nominal value.

• Fixed-income Securities: Investment vehicles that offer a fixed periodic return.

• Fixed Rate Bonds: Bonds bearing fixed interest payments until maturity date.

• Floating Rate Bonds: Bonds bearing interest payments that are tied to current interest rates.

• Fundamental Analysis: Research to predict stock value that focuses on such determinants as earnings and dividends prospects, expectations for future interest rates and risk evaluation of the firm.

• Future Value: The amount to which a current deposit will grow over a period of time when it is placed in an account paying compound interest.

• Future Value of an Annuity: The amount to which a stream of equal cash flows that occur in equal intervals will grow over a period of time when it is placed in an account paying compound interest.

• Futures Contract: A commitment to deliver a certain amount of some specified item at some specified date in the future.

• Hedge: A combination of two or more securities into a single investment position for the purpose of reducing or eliminating risk.

• Income: The amount of money an individual receives in a particular time period.

• Index Fund: A mutual fund that holds shares in proportion to their representation in a market index, such as the S&P 500.

• Initial Public Offering (IPO): An event where a company sells its shares to the public for the first time. The company can be referred to as an IPO for a period of time after the event.

• Inside Information: Non-public knowledge about a company possessed by its officers, major owners, or other individuals with privileged access to information.

• Insider Trading: The illegal use of non-public information about a company to make profitable securities transactions

• Intrinsic Value: The difference of the exercise price over the market price of the underlying asset.

• Investment: A vehicle for funds expected to increase its value and/or generate positive returns.

• Investment Adviser: A person who carries on a business which provides investment advice with respect to securities and is registered with the relevant regulator as an investment adviser.

• IPO price: The price of share set before being traded on the stock exchange. Once the company has gone Initial Public Offering, the stock price is determined by supply and demand.

• Junk Bond: High-risk securities that have received low ratings (i.e. Standard & Poor’s BBB rating or below; or Moody’s BBB rating or below) and as such, produce high yields, so long as they do not go into default.

• Leverage Ratio: Financial ratios that measure the amount of debt being used to support operations and the ability of the firm to service its debt.

• Libor: The London Interbank Offered Rate (or LIBOR) is a daily reference rate based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale money market (or interbank market). The LIBOR rate is published daily by the British Banker’s Association and will be slightly higher than the London Interbank Bid Rate (LIBID), the rate at which banks are prepared to accept deposits.

• Limit Order: An order to buy (sell) securities which specifies the highest (lowest) price at which the order is to be transacted.

• Limited Company: The passive investors in a partnership, who supply most of the capital and have liability limited to the amount of their capital contributions.

• Liquidity: The ability to convert an investment into cash quickly and with little or no loss in value.

• Listing: Quotation of the Initial Public Offering company’s shares on the stock exchange for public trading.

• Listing Date: The date on which Initial Public Offering stocks are first traded on the stock exchange by the public

• Margin Call: A notice to a client that it must provide money to satisfy a minimum margin requirement set by an Exchange or by a bank / broking firm.

• Market Capitalization: The product of the number of the company’s outstanding ordinary shares and the market price of each share.

• Market Maker: A dealer who maintains an inventory in one or more stocks and undertakes to make continuous two-sided quotes.

• Market Order: An order to buy or an order to sell securities which is to be executed at the prevailing market price.

• Money Market: Market in which short-term securities are bought and sold.

• Mutual Fund: A company that invests in and professionally manages a diversified portfolio of securities and sells shares of the portfolio to investors.

• Net Asset Value: The underlying value of a share of stock in a particular mutual fund; also used with preferred stock.

• Offer for Sale: An offer to the public by, or on behalf of, the holders of securities already in issue.

• Offer for Subscription: The offer of new securities to the public by the issuer or by someone on behalf of the issuer.

• Open-end (Mutual) Fund: There is no limit to the number of shares the fund can issue. The fund issues new shares of stock and fills the purchase order with those new shares. Investors buy their shares from, and sell them back to, the mutual fund itself. The share prices are determined by their net asset value.

• Open Offer: An offer to current holders of securities to subscribe for securities whether or not in proportion to their existing holdings.

• Option: A security that gives the holder the right to buy or sell a certain amount of an underlying financial asset at a specified price for a specified period of time.

• Oversubscribed: When an Initial Public Offering has more applications than actual shares available. Investors will often apply for more shares than required in anticipation of only receiving a fraction of the requested number. Investors and underwriters will often look to see if an IPO is oversubscribed as an indication of the public’s perception of the business potential of the IPO company.

• Par Bond: A bond selling at par (i.e. at its face value).

• Par Value: The face value of a security.

• Perpetual Bonds: Bonds which have no maturity date.

• Placing: Obtaining subscriptions for, or the sale of, primary market, where the new securities of issuing companies are initially sold.

• Portfolio: A collection of investment vehicles assembled to meet one or more investment goals.

• Preference Shares: A corporate security that pays a fixed dividend each period. It is senior to ordinary shares but junior to bonds in its claims on corporate income and assets in case of bankruptcy.

• Premium (Warrants): The difference of the market price of a warrant over its intrinsic value.

• Premium Bond: Bond selling above par.

• Present Value: The amount to which a future deposit will discount back to present when it is depreciated in an account paying compound interest.

• Present Value of an Annuity: The amount to which a stream of equal cash flows that occur in equal intervals will discount back to present when it is depreciated in an account paying compound interest.

• Price/Earnings Ratio (P/E): The measure to determine how the market is pricing the company’s common stock. The price/earnings (P/E) ratio relates the company’s earnings per share (EPS) to the market price of its stock.

• Privatization: The sale of government-owned equity in nationalized industry or other commercial enterprises to private investors.

• Prospectus: A detailed report published by the Initial Public Offering company, which includes all terms and conditions, application procedures, IPO prices etc, for the IPO

• Put Option: The right to sell the underlying securities at a specified exercise price on of before a specified expiration date.

• Rate of Return: A percentage showing the amount of investment gain or loss against the initial investment.

• Real Interest Rate: The net interest rate over the inflation rate. The growth rate of purchasing power derived from an investment.

• Redemption Value: The value of a bond when redeemed.

• Reinvestment Value: The rate at which an investor assumes interest payments made on a bond which can be reinvested over the life of that security.

• Relative Strength Index (RSI): A stock’s price that changes over a period of time relative to that of a market index such as the Standard & Poor’s 500, usually measured on a scale from 1 to 100, 1 being the worst and 100 being the best.

• Repurchase Agreement: An arrangement in which a security is sold and later bought back at an agreed price and time.

• Resistance Level: A price at which sellers consistently outnumber buyers, preventing further price rises.

• Return: Amount of investment gain or loss.

• Rights Issue: An offer by way of rights to current holders of securities that allows them to subscribe for securities in proportion to their existing holdings.

• Risk-Averse, Risk-Neutral, Risk-Taking:
  Risk-averse describes an investor who requires greater return in exchange for greater risk.
  Risk-neutral describes an investor who does not require greater return in exchange for greater risk.
  Risk-taking describes an investor who will accept a lower return in exchange for greater risk.

• Senior Bond: A bond that has priority over other bonds in claiming assets and dividends.

• Short Hedge: A transaction that protects the value of an asset held by taking a short position in a futures contract.

• Settlement: Conclusion of a securities transaction when a customer pays a broker/dealer for securities purchased or delivered, securities sold, and receives from the broker the proceeds of a sale.

• Short Position: Investors sell securities in the hope that they will decrease in value and can be bought at a later date for profit.

• Short Selling: The sale of borrowed securities, their eventual repurchase by the short seller at a lower price and their return to the lender.

• Speculation: The process of buying investment vehicles in which the future value and level of expected earnings are highly uncertain.

• Stock Splits: Wholesale changes in the number of shares. For example, a two for one split doubles the number of shares but does not change the share capital.

• Subordinated Bond: An issue that ranks after secured debt, debenture, and other bonds, and after some general creditors in its claim on assets and earnings. Owners of this kind of bond stand last in line among creditors, but before equity holders, when an issuer fails financially.

• Substantial Shareholder: A person acquires an interest in relevant share capital equal to, or exceeding, 10% of the share capital.

• Support Level: A price at which buyers consistently outnumber sellers, preventing further price falls.

• Technical Analysis: A method of evaluating securities by relying on the assumption that market data, such as charts of price, volume, and open interest, can help predict future (usually short-term) market trends. Contrasted with fundamental analysis which involves the study of financial accounts and other information about the company. (It is an attempt to predict movements in security prices from their trading volume history.)

• Time Horizon: The duration of time an investment is intended for.

• Trading Rules: Stipulation of parameters for opening and intra-day quotations, permissible spreads according to the prices of securities available for trading and board lot sizes for each security.

• Trust Deed: A formal document that creates a trust. It states the purpose and terms of the name of the trustees and beneficiaries.

• Underlying Security: The security subject to being purchased or sold upon exercise of the option contract.

• Valuation: Process by which an investor determines the worth of a security using risk and return concept.

• Warrant: An option for a longer period of time giving the buyer the right to buy a number of shares of common stock in company at a specified price for a specified period of time.

• Window Dressing: Financial adjustments made solely for the purpose of accounting presentation, normally at the time of auditing of company accounts.

• Yield (Internal rate of Return): The compound annual rate of return earned by an investment

• Yield to Maturity: The rate of return yield by a bond held to maturity when both compound interest payments and the investor’s capital gain or loss on the security are taken into account.

• Zero Coupon Bond: A bond with no coupon that is sold at a deep discount from par value.