Investment Valuation in India

The reason why China is fast becoming a preferred investment destination and is a toigh competitor for India are not as obvious as it seems. Economic giant US is also not as dominating for China as it is for most other nations in the world. The fact that Chinese goods are sold at a low price across the world is not only because China has been able to able to leverage on the scale and cheap labour backed by solid manufacturing infrastructure. The reasons are more than what meets the eye. The fact is that Chinese yuan is kept at an artificially low level, giving it an unfair advantage in selling its exports. Based on this exchange rate, the US goods looks artificially inflated in price while Chinese goods look artificially deflated in price. US exports to China in 2008 were $69.7 billion (exports to India were $25.7 bn) while the Imports were $337.8 billion (Imports from India were $17.682 bn). China has not been letting its currency appreciate in a free market as it feels that...

Please take a look at the Budget Highlights 2010 Omnifin Budget Highlights 2010

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...

Unemployment Insurance or Employment Insurance as it is called in some countries provides temporary financial assistance for unemployed citizens while they look for work. In times of distress such as the global financial crisis when people get laid off, this is an effective way to protect people financially, well to an extent at least. At the same time this does not promote or encourage unemployment among people. HOW IT WORKS? This insurance is not applicable for people who have not started working yet. This only applies if you were working as an employee. Eligibility Generally you need to be ‘qualified’ to be insured. Qualification includes Insurable hours - Continuous period of work for a certain minimum hours (eg. 52 weeks) Unemployment – you need to be without work and without pay for some minimum days (eg 7 days) No fault – you should have been fired for no fault of yours and should not have left the job without any ‘valid’ reason. Insurance Premium: A portion of salary (e.g. 2%) ...

Vulture Funds are financial organizations/private equity firms that seek to invest in debt issued by a company (or in case of a sovereign debt, a country) that is weak and dying. They are also called “Distressed Debt funds”. They buy up sovereign debts of poor nations that are assumed default or near bankrupt when at time the debt is just about to be written off and eventually sue the debtor for the full value of the debt plus interest in the future. The full value is usually 10 times the original paid up debt. Alternatively, they hold on to these investments (if the issuer doesn’t default) and sells them when the prices skyrocket. So these vultures prey upon the debt cancellation measures received by the poor companies/nations by purchasing their debt at a discount (sometimes as low as 20%) and redeeming it at a premium (including interest). They provide a useful alternative for investors who are unable to follow up upon their defaulted debt and in turn are certain to face financial r...

The celebrations of free ATM transactions from any bank in India was not even over that the RBI accepted the Indian Banks Association (IBA) proposal to re-introduce transaction charges for customers on the use of other banks’ ATM. IBA has proposed to levy a transaction fee of Rs. 20 per transaction for using another bank's ATM more than five times a month. Also the Reserve Bank of India has said that not more than Rs 10,000 can be withdrawn each time they are used. It will be optional on the part of the banks to levy this charge on customers. IBA has not made it mandatory but left it to the banks' discretion. Since the banks will recover the transaction costs it would have to pay to the bank providing the ATM services, it has less to lose. Once again, it’s the customers who lose. ATMs have become an important channel for banking transactions, particularly for cash withdrawal and account balance enquiry and also funds transfer, bill payments and cell phone recharge facilities. T...

A SAS 70 report is the service auditor’s report on a service organization’s controls for use by user organizations and their auditors. Statement on Auditing Standards (SAS) No. 70, Service Organizations, is a widely recognized auditing standard developed by the American Institute of Certified Public Accountants (AICPA). The requirements of Section 404 of the Sarbanes-Oxley Act of 2002 make SAS 70 audit reports even more important to the process of reporting on the effectiveness of internal control over financial reporting It applies to any service organization that: • Executes transactions and maintains accountability or • Records transactions and processes related data The primary purpose of the SAS 70 report is to provide information about the service organization to auditors who audit the user organization’s financial statements. Benefits of a SAS 70 Report Reduces disruption to service organization operations (single auditor concept) - Otherwise, auditors of all user organizat...