Bonds: A bond is a debt security. When you purchase a bond, you are lending money to a government, municipality, corporation, federal agency or other entity known as the issuer. In return for the loan, the issuer promises to pay you a specified rate of interest during the life of the bond and to repay the face value of the bond (the principal) when it matures, or comes due.Among the types of bonds you can choose from are: U.S. government securities, municipal bonds, corporate bonds, mortgage and assetbacked securities, federal agency securities and foreign government bonds.________________________________________________________________________Convertible Bonds:Convertible Bonds give bondholders the right but not the obligation to convert their bonds into a predetermined number of shares at predetermined dates prior to the bond's maturity. (Obviously this only applies to corporate bonds).________________________________________________________________________Municipal Bonds: Municipal bonds (also known as munis) are attractive to many investors because the interest income is exempt from federal income tax, and in many cases, state and local taxes as well. In addition, munis often represent investments in state and local government projects that have an impact on our daily lives, including schools, highways, hospitals, housing, sewer systems and other important public projects.________________________________________________________________________Corporate Bonds:Corporate bonds are debts issued by industrial, financial and service companies to finance capital investment and operating cash flow.________________________________________________________________________Mortgage Backed Securities (MBS):A mortgage-backed security (MBS) is a securitized interest in a pool of mortgages. It is a bond. Instead of paying investors fixed coupons and principal, it pays out the cash flows from the pool of mortgages.

ORMortgage Backed Securities can be referred to as asset backed securities, where the flow of funds is supported by the regular payments towards the principal amount and payments of interests for a number of mortgage loans. ________________________________________________________________________Asset Backed Securities(ABS):Asset-backed securities (ABS) usually carry some form of credit enhancement such as bond insurance, to make them attractive to investors________________________________________________________________________Bond Option:An option contract in which the underlying asset is a bond. Other than the different characteristics of the underlying assets, there is no significant difference between stock and bond options. ________________________________________________________________________Cash Flow:Theamount of cash generated and used bya company in a given period, calculated by adding non-cash charges (such as depreciation) to net income after taxes. Cash flow can be attributed to a specific project, or to a business as a whole. Cash flow can be used as an indication of a company's financial strength________________________________________________________________________Credit Derivatives:Credit derivatives are financial assets like forward contracts, swaps, and options for which the price is driven by the credit risk of economic agents (private investors or governments).

For example, a bank concerned that one of its customers may not be able to repay a loan can protect itself against loss by transferring the credit risk to another party while keeping the loan on its books.

Equity:In general, you can think of equity as ownership in any asset after all debts associated with that asset are paid off. For example, a car or house with no outstanding debt is considered the owner's equity since he or she can readily sell the itemsfor cash.Stocks are equity because they represent ownership of a company, whereas bonds are classified as debt because they represent an obligation to pay and not ownership of assets. _____________________________________________________________________________________Repos(Repurchase Agreement)A form of short-term borrowing for dealers in government securities. The dealer sells the government securities to investors, usually on an overnight basis, and buys them back the following day. For the party selling the security (and agreeing to repurchase it in the future) it is a repo; for the party on the other end of the transaction, (buying the security and agreeing to sell in the future) it is a reverse repurchase agreement. Repos are classified as a money-market instrument. They are usually used to raise short-term capital. _____________________________________________________________________________________Spot Market:A commodities or securities market in which goods are sold for cash and delivered immediately. Contracts bought and sold on these markets are immediately effective.

The spot market is also called the "cash market" or "physical market",because prices aresettled in cash on the spot at current market prices, as opposed to forward prices. _______________________________________________________________________Warrants :A derivative security that gives the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame

The main difference between warrants and call options is that warrants are issued and guaranteed by the company, whereas options are exchange instruments and are not issued by the company. Also, the lifetime of a warrant is often measured in years, while the lifetime of a typical option is measured in months. ________________________________________________________________________Mortgage :Adebt instrument, secured by the collateral of specified real estate property, thatthe borrower is obliged to pay back with apredetermined set of payments. Mortgages are used by individuals and businesses wishing to make large value purchases of real estate without paying the entire value of the purchase up front.

Mortgages are also known as liensagainst property, or claims on property.

In a residentialmortgage, a homebuyer pledges his or her houseto the bank. The bank has a claim on the house should the homebuyer default on paying his or her mortgage. In the case of a foreclosure, the bank may evict the home's tenants and sell the house, using theincome from the saleto clear the mortgage debt ________________________________________________________________________Interest Rate Swap:An interest rate swap agreement is a contract between two parties to exchange interest (coupon) payments on a specified notional principal amount for a specific term. No principal is exchanged only interest flows. In a generic interest rate swap one party pays fixed and the other party pays floating. The fixed swap rate is a market rate that approximates investment grade fixed rate borrowing levels. The floating rate is a short-term market rate based on a specific money market index (i.e., LIBOR-- London Interbank Offered Rate).

Another Defination

Interest rate swaps are simply the exchange of one set of cash flows (based on interest rate specifications) for another. Because they trade OTC, they are really just contracts set up between two or more parties, and thus can be customized in any number of ways.

_______________________________________________________________________

SWAPTION:An interest rate swaption is an option to enter into an interest rate swap agreement on pre-set terms at a future date. The purchaser and seller of the swaption agree on the expiration date, option type (e.g., payer's swaption), exercise style (e.g., European), the terms of the underlying swap and the type of settlement (e.g., cash or swap). As the expiration date approaches, the swaption holder can either notify the seller of its intention to exercise or let the option expire. The terminology used in describing and analyzing swaptions, like the name swaption itself, combines the terminology of swaps and options. Like swaps, swaptions are easier to understand and the relationships are easier to remember if everything is viewed from the fixed rate side rather than the floating rate (money market) side of the underlying swap transaction. A payer's swaption is the right to pay a fixed rate. An amount is paid upfront as premium

For Example: On the date of the expiry of the option if the LIBOR is above 8% then Microsoft would exercise the swaptionwhich would result in a gain for the company.

On the date of the expiry of the option if the LIBOR is below 8% then Microsoft would not exercise the swaptionas this would mean a loss for the company.. paying an interest at the fixed rate of 8% when its receiving interest lower than 8%. ________________________________________________________________________EQUITY SWAP:An Equity swap is financial transaction in which one party agrees to make a series of payments to another at regularly scheduled dates. The opposite party, in turn, agrees to make a series of payments to the first party. EQS enable a fund manager to increase or reduce their exposure to an index without buying and selling stock. EQS are entered to avoid transaction cost & local dividend taxes. Thus, equity swaps can be viewed as fully leveraged equity.

Another Defination

An equity swap is a swap where a set of future cash flows are exchanged between two counterparties. One of these cash flow streams will typically be based on a reference interest rate. The other will be based on the performance of a share of stock or stock market index. The two cash flows are usually referred to as "legs". _______________________________________________________________________Futures:A future contract is a standardized contract traded on an exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a pre-set price ________________________________________________________________________OptionsAn option is the right, but not the obligation, to buy or sell underlying asset (futures, commodity, currency, index) and other financial instrument at an agreed price, on or before a given expiry date.

Strike price/ Exercise price - Price at which the option can be exercised.Expiration date - Date on which the option expires.Exercise date - Date on which the option gets exercised by the option holder/buyer.Option premium / price- The price paid by the option buyer to the option seller for granting the option.

Types of Option

There are two types of option - Call and Put

A Call option gives the buyer the right, but not the obligation, to purchase the underlying asset at a strike price, before or on the date of expiry.

A Put option gives the buyer the right, but not the obligation, to sell the underlying asset at the strike price, before or on the date of expiry.

There are two main types of options:

American options can be exercised at any time between the date of purchase and the expiration date.

European options can only be exercised on the expiry date and not on anytime in between. ________________________________________________________________________Forward Rate Agreement:A forward rate agreement (FRA) is a contract between two parties to exchange interest (coupon) payments on a specified notional principal amount for one future period of predetermined length (i.e., one month forward for three months). Only interest flows are exchanged and no principal is exchanged. In a generic FRA one party pays fixed and the other party pays floating. This exchange allows for conversion of variable rate funding to fixed rate exposure or fixed rate funding to variable rate exposure. An FRA is essentially a short-term, single period interest rate swap. ________________________________________________________________________Contracts for Differences (CFDS):CFDs are agreements between the broker and the investor to pay the difference between the opening and closing price of a contract. Contracts for Difference (CFDs) are derivatives that are settled daily on the basis of movements in the prices of the underlying assets. ________________________________________________________________________Credit default Swaps(CDS):A Credit Default Swap (CDS) is a swap in which one counterparty receives a premium at pre-set intervals in consideration for guaranteeing to make a specific payment should a negative credit event take place. CDS are thus contracts between two parties that enable parties to either buy or sell protection against the risk of default of an asset issued by a specified reference entity. CDS is a kind of insurance against credit risk. The buyer of protection pays a fixed coupon to the seller of protection for a period of time and if a certain pre-specified Credit event occurs, the protection seller pays compensation to the protection buyer. ________________________________________________________________________FX Swaps(Foreign Exchange Swap):A foreign exchange swap is a combination of a spot transaction and an opposite outright forward. Foreign exchange swaps are the most important type of forward foreign exchange instrument. They are used for risk management, cross-currency liquidity management and to exploit interest arbitrage opportunities. ________________________________________________________________________Outright Forward:Forward market purchase or sale of foreign exchange without a corresponding Spot Market purchase is called Outright Forward.For example buying a one-month, two-month, or three-month contract in a given currency.________________________________________________________________________Call Account:A call account offers a base rate, a loyalty premium computed on the lowest balance of the year and a growth premium computed on the net increase in the deposit over the year. ________________________________________________________________________IAMs (Interest at Maturity):In this case you can invest large amounts of money and keep on getting Interest on your invested amounts and on the due date or maturity date you will get your invested amount. ________________________________________________________________________CAPs and Floor(CAF):CAPs is the highest acceptable limit as restricted by controlling parties whereas Floor is the lowest acceptable limit as restricted by controlling parties. A floor, or bottom, is the minimum allowable limit.

For example: If interest rate has a base of 8% and CAPS is fixed at 10% and Floor is fixed at 6%, then if interest rate goes up to 9% then CAPS will be 9% but if interest rate further goes up to 11% or more than CAPS will be 10%. Similarly if interest goes below 6% i.e. 5% or less even then Floor will be 6% but if interest rate slightly decreases to 7% then Floor will be 7%. ________________________________________________________________________Equity Options:An option on shares of an individual common stock or exchange-traded fund is called equity Option. An option that has common stock as its underlying security ________________________________________________________________________Credit Derivatives:Credit derivatives are bilateral contracts that allow users to manage their exposure to credit risks. They are financial assets like forward contracts, swaps and options for which the price is driven by private investors or governments.

For example, a bank concerned that one of its customers may not be able to repay a loan can protect itself against loss by transferring the credit risk to another party while keeping the loan on its books ________________________________________________________________________Forward Rate Agreement (FRA):FRA is an agreement to pay the difference between an interest rate that is calculated using a market rate and one calculated using a contract rate at the future date.________________________________________________________________________WHAT IS A HEDGE FUND?A Hedge Fund is a fund that can take both long and short positions, use arbitrage, buy and sell undervalued securities, trade options or bonds, and invest in almost any opportunity in any market where it foresees impressive gains at reduced risk. The primary aim of most hedge funds is to reduce volatility and risk while attempting to preserve capital and deliver positive returns under all market conditions. ________________________________________________________________________Fund of funds (multi-manager vehicle):An investment vehicle whose holdings consist of shares in hedge funds and private-equity funds. Some of these multi-manager vehicles limit their holdings to specific managers or investment strategies, while others are more diversified. Investors in funds of funds are willing to pay two sets of fees, one to the fund-of-funds manager and another set of (usually higher) fees to the managers of the underlying funds. ________________________________________________________________________Net asset value (NAV)The market value of a fund's total assets, minus its liabilities and intangible assets, divided by the number of its shares outstanding. The measure is used to determine prices available to investors for redemptions and subscriptions. Hedge funds typically calculate their NAVs at the end of every business day, but report them to investors on a monthly basis. Mutual funds report their NAVs daily. ________________________________________________________________________Offshore' hedge funds:Offshore hedge funds are designed to allow non-U.S. citizens to invest in U.S. securities

Who can invest in offshore hedge funds?Primarily, non-U.S. Citizens or non-taxed entities can invest in offshore hedge funds.________________________________________________________________________Master fund:A common type of hedge fund structure is called a master feeder. AMaster feeder fund is (most commonly) a two-tiered investment structurein which investors deposit capital in a feeder fund, which in turninvests in a master fund that is managed by the same investment advisor.The master fund is the entity that invests in the market as proscribedby the partnership agreement.A common hedge-fund structure through which a manager sets up two separate vehicles -- one based in the U.S. and an offshore fund that is domiciled outside the U.S. -- which serve as the only investors for a third non-U.S. fund. The two smaller entities are known as feeder funds, while the large offshore vehicle acts as the master fund. The purpose of such an arrangement is to create a single investment vehicle for both U.S. and non-U.S. investors. _______________________________________________________________________

Feeder Fund:A feeder fund is generally where the capital investing begins capital (i.e. cash or securities) flows into the feeders from the investors, which in turn invests all or a portion of the capital into the master fund. The master fund then uses that infusion of capital to generate P&L (i.e. invests in securities, receives income/loss). The P&L generated from the master fund then needs to be allocated to all of its constituent feeders. (From the masters point of view, each feeder can be viewed as an investor)._______________________________________________________________________Incentive Fee:A contract that may be of either a fixed price or cost reimbursement nature, with a special provision for adjustment of the fixed price or fee. It provides for a tentative target price and a maximum price or maximum fee, with price or fee adjustment after completion of the contract for the purpose of establishing a final price or fee based on the contractor's actual costs plus a sliding scale of profit or fee that varies inversely with the cost but which in no event shall permit the final price or fee to exceed the maximum price or fee stated in the contract. See also cost contract; fixed price type contract. ________________________________________________________________________High Watermark:The highest peak in value that an investment fund/account has reached. This term is often used in the context of fund manager compensation, which is performance based.Investopedia Says: The high watermark ensures that the manager does not get paid large sums for poor performance. So if the manager loses money over a period, he or she must get the fund above the high watermark before receiving a performance bonus. For example, say after reaching its peak a fund loses $100,000 in year one, and then makes $250,000 in year two. The manager therefore not only reached the high watermark but exceeded it by $150,000 ($250,000 - $100,000), which is the amount on which the manager gets paid the bonus.Mutual FundsA mutual fund is a form of collective investments that pools money from many investors and invests their money in stocks, bonds, short-term money market instruments, and/or other securities.[1] In a mutual fund, the fund manager who is also known as the portfolio manager, trades the fund's underlying securities, realizing capital gains or losses, and collects the dividend or interest income. The investment proceeds are then passed along to the individual investors. The value of a share of the mutual fund, known as the net asset value per share (NAV), is calculated daily based on the total value of the fund divided by the number of shares currently issued and outstanding.

Different types of Mutual Funds

Money Market FundsThese funds are a great place to park your money. Whether you're storing money for emergencies, saving for the short-term, or looking for a place to store cash from the sale of an investment, money market funds are a safe place to invest. These funds invest in short-term debt instruments and typically produce interest rates that double what a bank can offer in a checking account or savings account and rival the returns of a CD (Certificate of Deposit). The beauty of money market funds is that you can often write checks out of your account and they provide a high amount of liquidity (ability to cash out quickly) not found in CD's. These funds are not FDIC insured, but in the history of money market funds no money market fund has ever folded, yet many banks have failed and many investors with over $100,000 lost out. Bond FundsBond funds carry more risk than money market funds are often used to produce income (useful in retirement) or to help stabilize a portfolio (diversification). The primary types of bond funds are: Municipal Bond Funds -uses tax-exempt bonds issued by state and local governments (these funds are non-taxable). Corporate Bond Funds -uses the debt obligations of U.S. corporations. Mortgage-Backed Securities Funds - uses securities representing residential mortgages. U.S. Government Bond Funds -uses U.S. treasury or government securities. Another way bond funds are often classified is by maturity, or the date the borrower (whether it be the bank, the government, a corporation or an individual) must pay back the money borrowed. Using this classification bonds are often called short-term bonds, intermediate-term bonds, or long-term bonds.

Stock FundsStocks funds are considered riskier than bond funds (although certain bond funds can be very risky) and are used for growing your money. Money market funds and bond funds typically provide returns just a percentage or two above inflation, but stock funds should do much better over long periods of time.

Credit derivatives are financial assets like forward contracts, swaps, and options for which the price is driven by the credit risk of economic agents (private investors or governments).For example, a bank concerned that one of its customers may not be able to repay a loan can protect itself against loss by transferring the credit risk to another party while keeping the loan on its books.Based on the type of risk being transferred, credit derivatives may be broadly classed in credit default swaps total rate of return swaps equity default swaps In a credit default swap, the protection buyer continues to pay a certain premium to the protection seller; with the option to put the credit to the protection seller should there be a credit event. Unless there is a credit event, there is no exchange of the actual asset or the cash flows arising out of the actual asset.In a total rate of return swaps, the parties agree to exchange the actual cashflows from the asset (say a bond), including the appreciation and depreciation in its market value, periodically, with returns referenced to a certain reference rate. Say, the reference rate is LIBOR. The protection buyer will get LIBOR + x bps, and pay over to protection seller all he earns from the reference assets. Thus, he replaces the returns from the reference asset by a return calculated on a reference rate - thereby transferring both the credit risk as well as the price risk of the reference asset.Equity default swaps, relatively new in the marketplace, use a substantial and non-transient decline in the market value of equity as a trigger event - assuming that a deep decline in the market value of equity is either indicative of a default or preparatory for a defaultRole of Fund accountant0. We reconcile the cash and positions and prices for each product with that of the Prime Broker. 0. Any breaks / mismatches between the two systems for positions are investigated and prime brokers are queried, if required. 0. If there are OTC products in the portfolio, our OTC department will send out an OTC pack to you which contains the valuations for OTC products. Any amendment to the prices has to be agreed upon between you and the OTC team. Upon your final approval of the OTC pack, we load the final values in Geneva. 0. Once all the breaks are resolved and we have loaded the final OTC values, we send out a Draft Profit and Loss (PnL) and Portfolio Valuation Report to you. This is done prior to the booking of Management fees. 0. Upon approval of the performance numbers / PNL, we start working on Investor Allocations and book Management Fee and Performance Fees. 0. We then send across the Investor Level Allocations along with Month-End Pack that gives the reconciliations for cash and securities between Geneva and Prime broker. 0. Upon Ixis's approval of Investor allocations, we instruct the Investor relations team to release the Investor statements.

Ex-Date:

The date on or after which a security is traded without a previously declared dividend or distribution. After the ex-date, a stock is said to trade ex-dividend.This is the date on which the seller, and not the buyer, of a stock will be entitled to a recently announced dividend. The ex-date is usually two business days before the record date. It is indicated in newspaper listings with an x.

Record Date:The date established by an issuer of a security for the purpose of determining the holders who are entitled to receive a dividend or distribution.On the record date, a company looks to see who its shareholders or "holders of record" are. Essentially, a date of record ensures the dividend checks get sent to the right people.

Offshore Funds

Hedge Funds that are incorporated outside of the U.S. (generally Cayman Islands, Bermuda or Bahamas) and only allow U.S. Tax Exempt Investor or foreign investors to subscribe.

Onshore Funds Hedge Funds that are generally incorporated in the U.S. (generally Delaware) and only allow U.S. investors to subscribe.

Master Fund A fund that allows investors to direct their funds into a number of different wholesale or retail pooled funds operated by a variety of funds managers.

Advantages of Hedge Funds over Mutual FundsHedge funds are extremely flexible in their investment options because they use financial instruments generally beyond the reach of mutual funds, which have SEC regulations and disclosure requirements that largely prevent them from using short selling, leverage, concentrated investments, and derivatives.This flexibility, which includes use of hedging strategies to protect downside risk, gives hedge funds the ability to best manage investment risks. The strong results can be linked to performance incentives in addition to investment flexibility. Unlike many mutual fund managers, hedge fund managers are usually heavily invested in a significant portion of the funds they run and shares the rewards as well as risks with the investors. "Incentive fees" remunerate hedge fund managers only when returns are positive, whereas mutual funds pay their financial managers according to the volume of assets managed, regardless of performance. This incentive fee structure tends to attract many of Wall Streets best practitioners and other financial experts to the hedge fund industry. In the last nine years, the number of hedge funds has risen by about 20 percent per year and the rate of growth in hedge fund assets has been even more rapid. Currently, there are estimated to be approximately 7000 hedge funds managing $400-$500 billion. While the number and size of hedge funds are small relative to mutual funds, their growth reflects the importance of this alternative investment category for institutional investors and wealthy individual investors.

Prime Broker

A broker which acts as settlement agent, provides custody for assets, provides financing for leverage, and prepares daily account statements for its clients, who are money managers, hedge funds, market makers, arbitrageurs, specialists and other professional investors.

BrokerA broker is a party that mediates between a buyer and a seller. A brokerage or a brokerage firm is a business that acts as a broker. A sales person working for a securities or commodity brokerage firm is popularly (but incorrectly) called a "broker." A broker in that context is, strictly speaking, an exchange member who actually executes the purchase or sale order in the pit, on the exchange, as a service to the client of the firm for which that salesman works.

What Are Corporate Actions ?

A corporate action is an event initiated by a public company that affects the securities issued by the company. Some corporate actions such as a dividend or coupon payment may have a direct financial impact on the shareholders or bondholders. Other corporate actions such as stock split may have an indirect impact, as the increased liquidity of shares may cause the price of the stock to rise. Some corporate actions such as name change have no direct financial impact on the shareholders.

Corporate actions are typically agreed upon by a company's board of directors and authorized by the shareholders. Some examples are stock splits, dividends, mergers and acquisitions, rights issues and spin offs. Let's take a closer look at these different examples of corporate actions.

Stock Splits

A stock split or stock divide increases the number of shares in a public company. The price is adjusted such that the before and after market capitalization of the company remains the same and dilution does not occur.

Take, for example, a company with 100 shares of stock priced at $50 per share. The market capitalization is 100 $50, or $5000. The company splits its stock 2-for-1. There are now 200 shares of stock and each shareholder holds twice as many shares. The price of each share is adjusted to $25. The market capitalization is 200 $25 = $5000, the same as before the split.

Reverse Stock Splits.

A reverse stock split, or reverse split, is just the same, but in reverse: a reduction in number of shares and an accompanying increase in the share price.[1] The ratio is also reversed: 1-for-2, 1-for-3 and so on.

Dividends

Dividends are payments made by a corporation to its shareholder members. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be paid to the shareholders as a dividend. Many corporations retain a portion of their earnings and pay the remainder as a dividend.

Types of Dividend

There are two types of dividends a company can issue: Cash and Stock dividends.

I Cash Dividend:

Cash dividends (most common) are those paid out in the form of a cheque. Such dividends are a form of investment income and are usually taxable to the recipient in the year they are paid. This is the most common method of sharing corporate profits with the shareholders of the company.

For each share owned, a declared amount of money is distributed. Thus, if a person owns 100 shares and the cash dividend is $0.50 per share, they will receive $50.00 in total.

II Stock Dividend

Stock or scrip dividends are those paid out in form of additional stock shares of the issuing corporation, or other corporation (such as its subsidiary corporation). They are usually issued in proportion to shares owned (for example, for every 100 shares of stock owned, 5% stock dividend will yield 5 extra shares). If this payment involves the issue of new shares, this is very similar to a stock split in that it increases the total number of shares while lowering the price of each share and does not change the market capitalization or the total value of the shares held.

DatesDividends must be "declared" (approved) by a companys Board of Directors each time they are paid. For public companies, there are four important dates to remember regarding dividends. These are discussed in detail with examples at the Securities and Exchange Commission site [1]

Declaration date

The declaration date is the day the Board of Directors announces its intention to pay a dividend. On this day, a liability is created and the company records that liability on its books; it now owes the money to the stockholders. On the declaration date, the Board will also announce a date of record and a payment date.

Ex-dividend date

The ex-dividend date is the day on which all shares bought and sold no longer come attached with the right to be paid the most recently declared dividend. This is an important date for any company that has many stockholders, including those that trade on exchanges, as it makes reconciliation of who is to be paid the dividend easier. Prior to this date, the stock is said to be cum dividend ('with dividend'): existing holders of the stock and anyone who buys it will receive the dividend, whereas any holders selling the stock lose their right to the dividend. On and after this date the stock becomes ex dividend: existing holders of the stock will receive the dividend even if they now sell the stock, whereas anyone who now buys the stock now will not receive the dividend.

It is relatively common for a stock's price to decrease on the ex-dividend date by an amount roughly equal to the dividend paid. This reflects the decrease in the company's assets resulting from the declaration of the dividend. The company does not take any explicit action to adjust its stock price; in an efficient market, buyers and sellers will automatically price this in.

Record date

Shareholders who properly registered their ownership on or before the date of record will receive the dividend. Shareholders who are not registered as of this date will not receive the dividend. Registration in most countries is essentially automatic for shares purchased before the ex-dividend date.

Payment date

The payment date is the day when the dividend cheques will actually be mailed to the shareholders of a company or credited to brokerage accounts.

Rights Issues

A company implementing a rights issue is offering additional and/or new shares but only to already existing shareholders. The existing shareholders are given the right to purchase or receive these shares before they are offered to the public. A rights issue regularly takes place in the form of a stock split, and can indicate that existing shareholders are being offered a chance to take advantage of a promising new development.

Mergers and Acquisitions

A merger occurs when two or more companies combine into one while all parties involved mutually agree to the terms of the merge. The merge usually occurs when one company surrenders its stock to the other. If a company undergoes a merger, it may indicate to shareholders that the company has confidence in its ability to take on more responsibilities. On the other hand, a merger could also indicate a shrinking industry in which smaller companies are being combined with larger corporations. For more information, see "What happens to the stock price of companies that are merging together?"

In the case of an acquisition, however, a company seeks out and buys a majority stake of a target company's shares; the shares are not swapped or merged. Acquisitions can often be friendly but also hostile, meaning that the acquired company does not find it favorable that a majority of its shares was bought by another entity.

A reverse merger can also occur. This happens when a private company acquires an already publicly-listed company (albeit one that is not successful). The private company in essence turns into the publicly-traded company to gain trading status without having to go through the tedious process of the initial public offering. Thus, the private company merges with the public company, which is usually a shell at the time of the merger, and usually changes its name and issues new shares.

Spin Offs A spin off occurs when an existing publicly-traded company sells a part of its assets or distributes new shares in order to create a newly independent company. Often the new shares will be offered through a rights issue to existing shareholders before they are offered to new investors (if at all). Depending on the situation, a spin-off could be indicative of a company ready to take on a new challenge or one that is restructuring or refocusing the activities of the main business.

Mutual Funds vs. Hedge Funds -- the differences:

1 The primary difference is the legal and regulatory structure that a hedge fund operates under. A hedge fund is largely unregulated, whereas a mutual fund is very highly regulated.

2 An investor can visit hundreds of web sites to get stock quotes and ratings on funds, No such independent rating organization exists for hedge funds.

3 Mutual funds are limited in the amount of leverage they can take on by the SEC. For the moment, hedge funds are notCorporate Actions

Any event initiated by a corporation which brings the material changes to a company & impacts its shareholders .

This events are generally approved by Companys Board of Directors & Shareholders who are permitted to vote on such events.

In other words This are the benefits given by a company to its investors.

Eg :

Dividend Interest Bonus Right Issue Stock Spilt Return of Capital The return of capital is when some or all of the money an investor has in an investment is paid back to them, thus decreasing the value of the investment.

As it is called as return from an actual investment

Eg : Bought a stock @ $ 10 per share of X Company & the Company will declare Return of Capital @ $ 2 per share, it will be given back from the Investment made @ $ 10 per share.

This can not be considered as income or gain because it is not in excess of the original investment.

Tax:Not taxable until it begins to exceed your original investment value

Types of ratios? wht r they

Types of ratio classifiedLiquidity ratioAsset Turnover ratioProfitability ratioFinancial Leverage ratioDividend Policy ratio

What is Trial Balance?

A trial balance is a list of all the accounts for a period, to test that the Debits agree with the Credits

What is Dividend Yield Ratio?

dividend yield ratio=dividend per share/market price per share*100

US GAAP

US GAAP are Generally accepted accounting Principles used by companies based in USA or listed at Wallstreets.US GAAP comprises a massive volumes of standards, interpritations, opinions and bulletins and are developed by FASB(Financial accounting standard board). US is a combination of authorative standards and the accepted ways of doing accounting. US GAAP standards are certainely equivalent to IAS, however they are developed without any input from outside the US

International accounting Standard

The International Accounting Standards Board (IASB) founded on April 1, 2001 is the successor of the International Accounting Standards Committee (IASC) founded in June 1973 in London. It is responsible for developing the International Financial Reporting Standards (new name for the International Accounting Standards issued after 2001), and promoting the use and application of these standards.

The International Accounting Standards Board is an independent, privately-funded accounting standard-setter based in London, UK.

Banking Sector In India

In India the banking sector is segregated as public or private sector banks, cooperative banks and regional rural banks. Foreign banks has been given a different head followed by upcoming foreign banks.

Private Sector Banks In India

Private banking in India was practiced since the beginning of banking system in India. The first private bank in India to be set up in Private Sector Banks in India was IndusInd Bank. It is one of the fastest growing Bank Private Sector Banks in India. IDBI ranks the tenth largest development bank in the world as Private Banks in India and has promoted a world class institution in India.

The first Private Bank in India to receive an in principle approval from the Reserve Bank of India was Housing Development Finance Corporation Limited, to set up a bank in the private sector banks in India as part of the RBI's liberalization of the Indian Banking Industry. It was incorporated in August 1994 as HDFC Bank Limited with registered office in Mumbai and commenced operations as Scheduled Commercial Bank in January 1995.

ING Vysya, yet another Private Bank of India was incorporated in the year 1930. Bangalore has a pride of place for having the first branch inception in the year 1934. With successive years of patronage and constantly setting new standards in banking, ING Vysya Bank has many credits to its account.

List of Private Banks in India Bank of Punjab, Bank of Rajasthan, Catholic Syrian Bank , Centurion Bank, City Union Bank ,Dhanalakshmi Bank ,Development Credit Bank ,Federal Bank ,HDFC Bank ICICI Bank ,IDBI Bank ,IndusInd Bank ,ING Vysya Bank, Jammu & Kashmir Bank Karnataka Bank, Karur Vysya Bank, Laxmi Vilas Bank, South Indian Bank , United Western Bank ,UTI Bank

Public Sector Banks In India

Among the Public Sector Banks in India, United Bank of India is one of the 14 major banks which were nationalized on July 19, 1969. Its predecessor, in the Public Sector Banks, the United Bank of India Ltd., was formed in 1950 with the amalgamation of four banks viz. Comilla Banking Corporation Ltd. (1914), Bengal Central Bank Ltd. (1918), Comilla Union Bank Ltd. (1922) and Hooghly Bank Ltd. (1932).

Oriental Bank of Commerce (OBC), a Government of India Undertaking offers Domestic, NRI and Commercial banking services. OBC is implementing a GRAMEEN PROJECT in Dehradun District (UP) and Hanumangarh District (Raiasthan) disbursing small loans. This Public Secotor Bank India has implemented 14 point action plan for strengthening of credit delivery to women and has designated 5 branches as specialized branches for women entrepreneurs.

The following are the list of Public Sector Banks in India Allahabad Bank ,Andhra Bank ,Bank of Baroda ,Bank of India ,Bank of Maharastra ,Canara Bank ,Central Bank of India ,Corporation Bank ,Dena Bank ,Indian Bank, Indian Overseas Bank ,Oriental Bank of Commerce ,Punjab & Sind Bank ,Punjab National Bank ,Syndicate Bank ,UCO Bank ,Union Bank of India ,United Bank of India Vijaya Bank.

Co-Operative Banks In India

The Co operative banks in India started functioning almost 100 years ago. The Cooperative bank is an important constituent of the Indian Financial System, judging by the role assigned to co operative, the expectations the co operative is supposed to fulfil, their number, and the number of offices the cooperative bank operate. Though the co operative movement originated in the West, but the importance of such banks have assumed in India is rarely paralleled anywhere else in the world. The cooperative banks in India play an important role even today in rural financing. The business of cooperative bank in the urban areas also has increased phenomenally in recent years due to the sharp increase in the number of primary co-operative banks.

Co operative Banks in India are registered under the Co-operative Societies Act. The cooperative bank is also regulated by the RBI. They are governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1965.

Cooperative banks in India finance rural areas under: Farming ,Cattle ,Milk ,Hatchery ,Personal finance

Cooperative banks in India finance urban areas under: Self-employment, Industries, Small scale units, Home finance, Consumer finance Personal finance.

Regional Rural Banks In India Rural banking in India started since the establishment of banking sector in India. Rural Banks in those days mainly focussed upon the agro sector. Regional rural banks in India penetrated every corner of the country and extended a helping hand in the growth process of the country.

SBI has 30 Regional Rural Banks in India known as RRBs. The rural banks of SBI is spread in 13 states extending from Kashmir to Karnataka and Himachal Pradesh to North East. The total number of SBIs Regional Rural Banks in India branches is 2349 (16%). Till date in rural banking in India, there are 14,475 rural banks in the country of which 2126 (91%) are located in remote rural areas.

Apart from SBI, there are other few banks which functions for the development of the rural areas in India. Few of them are as follows: Haryana State Cooperative Apex Bank Limited, NABARD, Sindhanur Urban Souharda Co-operative Bank, United Bank of India, Syndicate Bank

Foreign Banks In India Foreign Banks in India always brought an explanation about the prompt services to customers. After the set up foreign banks in India, the banking sector in India also become competitive and accurative.

New rules announced by the Reserve Bank of India for the foreign banks in India in this budget has put up great hopes among foreign banks which allows them to grow unfettered. Now foreign banks in India are permitted to set up local subsidiaries. The policy conveys that forign banks in India may not acquire Indian ones (except for weak banks identified by the RBI, on its terms) and their Indian subsidiaries will not be able to open branches freely. Please see the list of Foreign banks in India till date.

List of Foreign Banks in India ABN-AMRO Bank ,Abu Dhabi Commercial Bank ,Bank of Ceylon ,BNP Paribas Bank Citi Bank ,China Trust Commercial Bank ,Deutsche Bank ,HSBC ,JPMorgan Chase Bank ,Standard Chartered Bank ,Scotia Bank ,Taib Bank

Upcoming Foreign Banks In India

By 2009 few more names is going to be added in the list of foreign banks in India. This is as an aftermath of the sudden interest shown by Reserve Bank of India paving roadmap for foreign banks in India greater freedom in India. Among them is the world's best private bank by EuroMoney magazine, Switzerland's UBS.

The following are the list of foreign banks going to set up business in India Royal Bank of Scotland Switzerland's UBS US-based GE Capital Credit Suisse Group Industrial and Commercial Bank of China Merrill Lynch is having a joint venture in Indian investment banking space -- DSP Merrill Lynch. Goldman Sachs holds stakes in Kotak Mahindra arms.

GE Capital is also having a wide presence in consumer finance through GE Capital India.

What is Equalization and why does it cause these problems?In the context of alternative investment and hedge funds - indeed any open ended fund that pays incentive or performance fees - the term "Equalization" refers to an accounting methodology, designed to ensure that not only the investment manager is paid the correct incentive, performance or profit sharing fee, but also that the incentive fees are fairly allocated between each investor in the fund.Why is this a problem? The easiest way to answer this is by way of examples:The Free Ride :Firstly the famous "free ride", which was the original reason and justification for the introduction of Equalisation in the first place.Table I - The "Free Ride"i)Investor A buys one Share at US$100ii)End of first quarter Gross NAV per Share has risen to US$110iii)NAV per share published at US$108 - (US$110 - US$2 incentive fee)iv)New High Watermark - US$110v)At end of the following month, the NAV per Share falls to US$100vi)Investor B buys one Share at US$100vii)High watermark still US$110viii) If NAV per Share rises to US$110 again, Investor B will have a US$2 (20% of US$10 profit) "Free Ride"

Subscription:When an investor subscribes his investment to the asset of a fund

Redemption: When an investor withdraws its investments from the fund

Management Fees:Investors pay to the fund for managing the assets.Can be paid monthly/quarterly/semi annually as mentioned in the PPM

Conditional Redemption Fee .Contingent redemption fee is paid into the fund. The purpose of this type of redemption fee is usually to discourage short-term or market-timing trades

SIDE POCKET INVESTMENTS enable a fund manager to invest in securities that are or become illiquid by allowing the fund manager to classify the securities as a designated or special investment i.e., held in a side pocket. Designated investments are valued separately from the general portfolio of the fund.

Index link bonds

A bond in which payment of income on the principal is related to a specific price index, often the Consumer Price Index. This feature provides protection to investors by shielding them from changes in the underlying index. The bond's cash flows are adjusted to ensure that the holder of the bond receives a known real rate of return.

In Canada, they also referred to as "real return bonds". This type of bond is valuable to investors because the real value of the bond is known from purchase and the risk involved with uncertainty is eliminated. These bonds are also less volatile than nominal bonds and they help investors to maintain their purchasing power. For example, assume that you purchase a regular bond with a nominal return of 4%. If inflation is 3%, you will actually only receive 1% in real terns. On the other hand, if you buy an index-linked bond your cash flow will be adjusted to changes in inflation and you will still receive the full 4% in returns.

Allocation Purpose and its use

Allocation is done to allocate the Profit or loss to different investors according to their share ratios. To ensure that the NAV of a fund is allocated to the investors in accordance with the governing documents.

Series:

A new Series of Shares is issued for each new subscription periodPrice per share at issue can be fixed - i.e. 100, or at previous NAV close gross or netEnsures performance fees are calculated based on timing of subscription into the fund no free rideEach series has unique HWM for calculation of fees and unique NAVOptional roll/consolidation of series at end of performance fee calculation period

Multi-currency FX hedgingperfect hedge application of pnl based on movement of the fx rate from prior period close to current period close, calculated on foreign ccy capital accounts . This is most efficiently used in combination with ccy outperformance, the basis point differential between the two underlying countrys reference interest rates. This application ensures that the foreign ccy class return is impacted by their holding in the fund and not specific fund trading to cover exposure.actual hedge the fund trades specifically to cover the foreign ccy class investment. The actual pnl is allocated to the foreign investors capital account. The fund must segregate any cash or forward trade(s) for hedging in Kondor/Geneva so that the FA can identify the hedge pnl to allocate. This type of application exposes the foreign ccy investors to the trading accuracy of the fund.

Hurdle RatesMinimum return an investors investment must reach before performance fees accrue typically associated with index performance

Side Pockets

When an investment is traded or determined to be illiquid, the holding is segregated into a special class. A portion of the existing investors holding is transferred to this class to cover initial value. This class is usually marked at cost and is closed upon sale of investment or determination that it is no longer illiquid. Fees associated with the class are usually not crystallized until close of class. Investors typically are not allowed any discretion regarding investment or redemption into this class.

index arbitrage

A strategy designed to profit from temporary discrepancies between the prices of the stocks comprising an index and the price of a futures contract on that index. By buying either the stocks or the futures contract and selling the other, an investor can sometimes exploit market inefficiency for a profit.

Statistical Arbitrage

A profit situation arising from pricing inefficiencies between securities. Investors identify the arbitrge situation through mathematical modeling techniques.

Stock loansIn finance, securities lending or stock lending refers to the lending of securities by one party to another

Non-deliverable forward /(NDFs)

A non-deliverable forward contract is a foreign currency financial derivative instrument. An NDF differs from a normal foreign currency forward contract in that there is no physical settlement of two currencies at maturity. Rather, based on the movement of two currencies, a net cash settlement will be made by one party to the other.

Fixed income instruments

Assets that pay a fixed dollar amount, such as bonds and preferred stock. The fixed income markets trade in debt instruments, such as bonds and loans, which pay interest. The rate of income is often fixed, hence the term fixed income. Fixed income instruments include bonds issued by governments, government-backed agencies and companies to raise capital to cover their spending requirements. The fixed income markets also trade in derivative instruments, the commonest of which are futures, options and swaps.

Treasury instruments

The treasury in a bank or in a company, is responsible for the availability and economic management of funds.

DEBT

Debt is that which is owed; usually referencing assets owed, but the term can cover other obligations. In the case of assets, debt is a means of using future purchasing power in the present before a summation has been earned. Some companies and corporations use debt as a part of their overall corporate finance strategy.

A debt is created when a creditor agrees to lend a sum of assets to a debtor. In modern society, debt is usually granted with expected repayment; in many cases, plus interest.