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Who s senior?
The bondholder is always more senior. Stockholders (including those who own
preferred stock) must wait until bondholders are paid during a bankruptcy before
claiming company assets.
An investor that wants the upside potential of equity but wants to minimize risk would
buy preferred stock. The investor would receive steady interest-like payments
(dividends) from the preferred stock that are more assured than the dividends from
common stock. (2.) The preferred stock owner gets a superior right to the company's
assets should the company go bankrupt. (3.) A corporation would invest in preferred
stock because the dividends on preferred stock are taxed at a lower rate than the
interest rates on bonds.
5. debenture?
A Debenture is " A certificate of agreement of loans which is given under the company's
stamp and carries an undertaking that the debenture holder will get a fixed return and
the principal amount whenever the debenture matures.
6. call option
Calls give the buyer the right but not the obligation to buy a gi ven quantity of the
underlying asset, at a given price on or before a given future date.
. Make sure that you put across the point that being good with numbers, being in the
knowledge of current and past market status, and having a good financial strategy that
is unfailing are some of the most important qualities for a career in investment making.
no interference by rbi.
9. beta?
Treasury Bills are money market instruments to finance the short term requirements of
the Government of India. These are discounted securities and thus are issued at a
discount to face value.
Initial cash inflow & outflow would be prepared based on forecasted revenue &
expenditure, month on month variance of actual vs projected would be analyised for
immediate corrective action & also for future use as same would be used as historical
trend.
Depreciation Account Dr
Accumulated Depreciation Account Cr
There are several reasons for a company to issue stock rather than debt. The first is if
it believes its stock price is inflated, and it can raise money (on very good terms) by
issuing stock. The second is when the projects for which the money is being rai sed may
not generate predictable cash flows in the immediate future. A simple example of this
is a startup company. The owners of startups generally will issue stock rather than take
on debt because their ventures will probably not generate predictable cash flows, which
is needed to make regular debt payments, and also so that the risk of the venture is
diffused among the company's shareholders. A third reason for a company to raise
money by selling equity is if it wants to change its debt-to-equity ratio. This ratio in
part determines a company's bond rating. If a company's bond rating is poor becaus e it
is struggling with large debts, they may decide to issue equity to pay down the debt.
According to me,the sprit of writer may be right but explanation is wrong.in second
point he explaned that company raise funds by equity because venture is not able to
generate enough funds to make regular debt payments but in this case shareholders or
venture capitalist will also not invest in that company which is not profitable as
shareholders expectations of return are generally higher than creditors as they bear
higher risk.Even a businessman will not like to do a business wich is not profitable
instead he will park his money somewhere else.
The main reasons for raising funds through equity are: -
1.When project is long term in nature and payback period is high.
2.When company is already debt laden then it will not be very easy to raise debt or it
will be costly,it will be better to raise equity to balance risk level.
15. mutual funds provide 50% returns last yr,will u invest in it?
×ou should look for more information, as past performance is not necessarily an
indicator of future results. How has the overall market done? How did it do in the years
before? Why did it give 50% returns last year? Can that strategy be expected to work
continuously over the next five to 10 years? ×ou need to look for answers to these
questions before making a decision.
I would also look what is the risk that was involved in grtting this returna and whether
my risk appetite matches with it or not.Another thing i would look at is the
diversification among different sectors or not.And last but not the least we can not
predict exactly whether the mutual fund will give the exact return in all the kinds of
market.
The DCF for an investment is calculated by estimating: the cash that you will have to
pay out, and the cash which you expect to receive back. The timeframes that you
expect to receive the payments must also be estimated. Each cash transaction must
then be recalculated, by subtracting the opportunity cost of capital between now and
the moment when you will pay or receive the cash.
Those cash flows which has considering the time factors of money in respect on cost of
capital is know as discounted cash flow...
17. EFT?
EFT is short for Electronic Funds Transfer. An EFT is a method of transferring money
from one bank account directly to another account without any paper money actually
changing hands. The two accounts do not have to be in the same bank.
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What are financial appliances which cost and price originate from the assessment
of assets underlying them called as? ANS: DERIVATIVES
Define a word investment that has taken out exclusively to diminish or abandon
out the threat in another investment? ANS:HEDGE
There is good word in financial that mean union or blender of either one or more
companies with another or the two or more companies to form one company.
What is that word? ANS: AMALGAMATION
Define a word that refers to a variety of schemes of contributing an equity
venture by a Company to its employees? ANS: ESOPs
What do you mean by Risk?
Future uncertainity
What is the Service TAX?
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