Finance Numericals

Derivatives:   It is a contract whose value is derived from other assets known as underlying asset. For example: financial instrument-shares, bond, warrant etc., Agriculture products- pulses, sugar etc. Derivative market products: Forward Contract:   It is a contract between two parties for buying and selling of assets in pre - determine date and price in future. It is also known as Over the Counter (OTC) contract. Future Contract:   It is a contract between two parties for buying and selling of assets in pre determine date and price in future in an organized way it means all transactions are done in a standardized way by regulated exchange only. Option:   It is a contract which gives right but not an obligation to buy and sell the underlying assets in future in pre determine price. Buyer has a right to buy assets and seller has an obligation to sell underlying assets to buyer when buyer uses his rights. Swap:   It is an agreement to exchange ca...

Venture Capital:   It is a type of financing company’s assets. To invest in a new company’s assets which carry higher risk but having longer growth potential is called venture Capital. It is also known as private equity because investors invest in private company only, which is not listed in stock market. Venture Capitalist:   They are professional investors who invest other’s people money in a new or small company which have higher growth in future. They are actively participating in management and their rate of return is 20 to 30%. Angel investor:   He is an individual investor who invest his own money in a new company to earn more profit is known as Angel investor. He is not taking active part in management. Founder dilution:   The entrepreneur (founder) has 100% ownership before amount raised from investors. If investors invest in a company then they get some ownership in that company and the founder’s ownership is reduces that is known as founder ...