Investment Insights

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Who is a foreign institutional investor (FII)?  FIIs are entities incorporated or established outside India who are allowed to invest in Indian capital market.   FIIs include asset management companies, pension funds, mutual funds, investment trusts as nominee companies, incorporated / institutional portfolio managers or their power of attorney holders, university Funds, endowment Foundations, charitable […]

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Reinvestment Risk.

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What is credit risk?  Credit risk refers to risk that issuer of bond can default in making payment of the principal amount and interest.   To compensate for the credit risk, higher yield on bond is paid to the investors.   Higher is the credit risk, higher the bond yield and wider will be the […]

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Arbitrage Spreads

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Trend of Arbitrage spread and return  The difference between future price and spot price of the underlying asset is known as basis.   In equity arbitrage, basis (difference) is due to the cost of carry1 (spread).   Normally basis is positive i.e. future price is higher than the spot price of the underlying asset and […]

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Arbitrage

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What is arbitrage?   Price discrepancy of same asset class in two different markets provides opportunity to make risk free profit by buying in the cheap market and selling in the overpriced market. This opportunity to make risk free profit is known as arbitrage.   Arbitrage opportunity to make risk free profit also takes place […]

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What is capital account?  Capital account records all capital inflows and outflows of a country and forms part of balance of payment (BoP).   It tracks the capital movement for investments and loans into and out of a country.   When there is capital account surplus it means a country is receiving more capital inflows. […]

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Dividend Yield

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Inflation proofing your income and income proofing your assets . ReWISE tells you why investing for dividend yield investing is a great investing style.

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Is there a correlation between policy actions and yields?  RBI uses three types of monetary policy actions   Repo rate which impact interest rates.   Cash reserve ratio (CRR) and statutory liquidity ratio (SLR) impacts liquidity conditions in the market.   RBI policy actions mainly include changing repo rate and CRR. SLR is not changed […]

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Yield Spread

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What is a yield spread?  Yield spread is the difference in the yield between two bonds of the same maturity.   Commonly, yield spread is the difference in the yield of any bond (PSU, corporate or banks) and Government bonds having the same maturity.   Suppose AAA 10 year corporate bond yield is 8.6% and […]

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Yield Curve

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What is yield curve?  Yield refers to the interest earned on a bond till it matures   Yield curve is a graphical presentation showing relationship between a bond’s yield and   It’s maturity.   A yield curve describes relation between yield on short term bond (referred to as short end of the yield) and long […]

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What is rupee appreciation & depreciation?  Exchange rate is the price of foreign currency (USD, Yen, Euro, Pound etc) in terms of domestic currency (rupee) i.e. amount of domestic currency needed to buy one unit of foreign currency.   Currently price of 1$ = Rs. 53.74, which means 1$ can be purchased in exchange of […]

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