On6 December 2011Bank of Englandposted on its website information about the new financial instrument, which main goal is to preserve liquidity during the shortage as to save the financial stability of the country.
“In light of the continuing exceptional stresses in financial markets, the Bank of England is today announcing the introduction of a new contingency liquidity facility, the Extended Collateral Term Repo (ECTR) Facility. This Facility is designed to mitigate risks to financial stability arising from a market-wide shortage of short-term sterling liquidity. There is currently no shortage of short-term sterling liquidity in the market. But should that position change, View full article »
The way things are turning out like The Barclays Saga and Libor , LIBOR Manipulation : ny thing for you Big Boyz , JP Morgan : Jamie Dimon Testimony and the series is endless ..I believe the quotes of the maverick author holds true :
- The main difference between government bailouts and smoking is that in some rare cases the statement “This is my last cigarette “holds true
As I left the space to define the various types of credit derivatives so here we go:
Credit default swap: Credit default swap can literally be defined as an option to swap a credit asset for cash, should it default. A credit default swap is essentially an option, and option bought by the protection buyer, and written by the protection seller. The strike price of the option is the par value of the reference asset. View full article »
People write to remember things, I write to forget. I am sure that definitely had many post on Credit derivatives.
Many of my friends and colleagues are still not so familiar with them and just wanted to define for them . For them the understanding of credit derivatives is that these monster was behind the subprime crisis in 2008, Lehman crisis, and later the Eurocrisis and now the Grexit.
Let me try to put some definitions quote and unquote: View full article »
The Greek puzzle is getting cozy each day . The G8 leaders backed Greece in euro zone as reported by Reuters. Putting any new remarks it looks like to wait and watch the scenario and action by the regulators, politicians.
Today I thought of sharing some old brokers terminologies and bit personal experience. As I quoted on FB View full article »
The rupee is getting weaker against the dollar and RBI likely stepped in to sell dollars via state-run banks in early trade on Monday after the rupee opened weaker on global risk-off sentiment. The rupee is trading at 53.46.
In the mean time just thought of sharing some basics from RBI : -
Narrow Money (M1) This is a fortnightly compilation. It consists of:
- Currency notes and coins with the public (Excluding cash on hand of all banks). View full article »
Some of my friends wanted to know more about the concepts and mechanics of time value, I have tried to put few examples along with it.
The process of discounting future cash flows converts them into cash flows in present value terms. Conversely, the process of compounding converts present cash flows into future cash flows.
Time Value Principle 1: Cash flows at different points in time cannot be compared and aggregated (i.e. added). All cash flows have to be brought to the same point View full article »
With the continuation of my last post some book rules for investments trying to reveal some of the structured products offered in the open economies of world amaze to see that more than 10 billions of structured products are sold every year :
- Reverse convertibles : They are unsecured short-term notes that are linked to the price of an underlying stock (typically not the stock of the issuer). The security comes with a high coupon rate (from 7 to as much as 25 percent). At maturity, the investor will receive the interest payment plus either 100 percent of his original investment amount or a predetermined number of shares of the underlying stock.
- An accumulator : This is one of the famous product in Asia. An accumulator is essentially a contract that obliges investors to purchase a security, currency or commodity at regular intervals at a fixed price. View full article »
I would like to dedicate today’s post to Rahul Dravid but the time is constraint will write for him soon :- I just don’t like that he is retiring, and people are talking about Sachin tendulkar! The Tragedy of his Life. Few more thing for him If Sachin Tendulkar was the Best thing to happen to Indian Cricket :Rahul Dravid was the Best thing to happen to Sachin tendulkar. ( I think that describes all for him)
The post is for my juniors, who wanted to have few jargon’s simplifications here you go :-
LEASE -BACK : Its an arrangement under which a company, in order to raise cash, sells a piece of equipment, ‘ land, or building on condition. that the buyer will lease it back to the seller for an agreed rental for a fixed term.
LEVERAGED BUYOUT : Taking over a company, using borrowed funds.
LEVERAGED COMPANY : If a company with borrowed funds in its capital structure. if the debt component is more than a third of the capitalization it’s called a highly leveraged company. View full article »