Investment Valuation in India

A bond carries a specific rate of interest which is also called the Coupon Rate. For example, if the Face Value of the bond is Rs 100 and the bond is issued at 8% coupon rate, the Interest would be calculated on the Face Value of the bond. That is, annual interest would be Rs 100 x 8% = Rs 8 per annum. Generally, the bonds may be issued or traded at a Par (Face Value), at a premium or at a discount to Face Value. Interest paid would be tax deductible for the issuer.

The Face Value of a Bond is the stated value on the face of the bond and is also known as Par Value. It represents the amount of borrowing by the firm which it specifies to repay after a specific period of time i.e. at the time of maturity. For example, if the Face Value of the bond is Rs 100 and the bond is issued at 8% coupon rate, the Interest would be calculated on the Face Value of the bond. That is, annual interest would be Rs 100 x 8% = Rs 8 per annum. Generally, the bonds may be issued or traded at a Par (Face Value), at a premium or at a discount to Face Value.

A Aggregate RiskTotal amount of exposure a bank has with a customer for both spot and forward contracts. American Option An option which may be exercised at any valid business date through out the life of the option. Appreciation Describes a currency strengthening in response to market demand rather than by official action. Arbitrage A risk-free type of trading where the same instrument is bought and sold simultaneously in two different markets in order to cash in on the difference in these markets. Around Used in quoting forward "premium / discount". Ask Price Ask is the lowest price acceptable to the buyer. Asset In the context of foreign exchange is the right to receive from a counterparty an amount of currency either in respect of a balance sheet asset (e.g. a loan) or at a specified future date in respect of an unmatched forward Forward or spot deal. At Best An instruction given to a dealer to buy or sell at the best rate that is currently avail...

A Aggregate Risk Total amount of exposure a bank has with a customer for both spot and forward contracts. American Option An option which may be exercised at any valid business date through out the life of the option. Appreciation Describes a currency strengthening in response to market demand rather than by official action. Arbitrage A risk-free type of trading where the same instrument is bought and sold simultaneously in two different markets in order to cash in on the difference in these markets. Around Used in quoting forward "premium / discount". Ask Price Ask is the lowest price acceptable to the buyer. Asset In the context of foreign exchange is the right to receive from a counterparty an amount of currency either in respect of a balance sheet asset (e.g. a loan) or at a specified future date in respect of an unmatched forward Forward or spot deal. At Best An instruction given to a dealer to buy or sell at the best rate that is currently avail...