The drawee’s acknowledgement of the LIABILITY on a BILL OF EXCHANGE, in writingon the instrument itself. A bill may also bear the co-acceptance by a bank, which is a guarantee tohonour the instrument in the event of default by the drawee.
A BILL OF EXCHANGE without any consideration, or quid pro quo. In thiscase, a person signs a bill and makes himself liable, without receiving any value in return, such as,an advantage or a benefit. The purpose of accepting such a bill is to accommodate the drawer whois temporarily in need of funds. The acceptance enhances the LIQUIDITY of the instrument, whichcan be discounted by the drawer with a bank.
A method of accounting that recognizes revenues and expenses as they accrue,even though cash would not have been received or paid during the accrual period.
An acronym for American Depository Receipt. It is an instrument traded at U.S. exchangesrepresenting a fixed number of shares of a foreign company that is traded in the foreign country. Bytrading in ADRs, U.S. investors manage to avoid some of the problems of dealing in foreignsecurities markets. The ADR route enables companies to raise funds in the U.S. financial markets,provided they meet the stringent regulatory norms for disclosure and accounting. (See also GDR.)
The acceptance of an application subscribing to the shares or other securities of acompany. Such allotment establishes the contractual relationship that underlies an investmentthrough public subscription.
The reduction f an amount at regular intervals over a certain time period. This termis used to refer to the reduction of debt by regular payment of loan installments during the life of aloan. It is also used to described the accounting process of writing off an intangible ASSET.
A yearly publication that contains particulars relating to the operating data of acompany, and which is published and distributed by the company to its share-holders, as per therequirement of the Companies Act. The important contents are the profit and loss statement andthe BALANCE SHEET. These statements show a company’s performance in terms of sales andearnings during a financial year, and also its year-end financial position in terms of ASSETS andLIABILITIES. It also contains the directors’ report, a notice to the shareholders about the proposedbusiness agenda of the annual general meeting and the auditor’s report.
The simultaneous purchase and sale transactions in a security or acommodity, undertaken in different markets to profit from price differences. Forexample, an arbitrageur may find that the share of The Tata Iron and Steel Company (TISCO) istrading at a lower price, at the Vadodara Stock Exchange compared to the exchange at Bombay.Hence, he may simultaneously purchase TISCO stock in Vadodara at, say Rs.250, and sell inBombay at a higher price, say Rs.256, making a profit of Rs.6 per share less expenses.
Asset Management Company
(AMC) A company set up for floating and managing schemes of aMUTUAL FUND. An AMC earns fees by acting as the PORTFOLIO manager of a fund. The AMC isappointed by the Board of Trustees, which oversees its activities. Thus, a mutual fund is generallyestablished as a trust by a SPONSOR, which could be a registered company, bank or FINANCIALINSTITUTION. Also, a custodian and a registrar are appointed to ensure safe keeping of the fund’ssecurities and to deal with investors’ applications, correspondence, etc.
The term relates to trading in listed OPTIONS. An option is said to be trading “at-the-money” when the STRIKING PRICE and the market price of the underlying share are equal.(See OPTIONS as well as Appendix II).
An Indian term for a trading system with a mechanism for deferring either paymentfor shares purchased or delivery of shares sold. The system, discontinued by the Securities andExchange Board of India (SEBI), from March 1994, was applicable to A group or ‘Specified’ shares.For carrying forward a purchase transaction from one settlement period to the next, the buyernormally paid the seller a charge termed badla or ‘Contango’. This consideration would be fixed inthe badla session. When buyers could not take delivery, badla financiers would step in and help outthe buyers. In the reverse but abnormal situation, when the market was in an oversold position anda buyer demanded delivery but the seller could not respond even by borrowing shares, the buyerwould be paid a ‘Backwardation charge’, also known as undha badla. However the buyer could insist