FINANCE NOTES 1) The three main financial statements: Income Statement Balance Sheet Statement of Cash Flows CAPITAL

MARKET: The market for securities, where companies and the government can raise long term funds! The capital market includes the stock market and the "ond market! It is a place where investors come together to "u# and sell shares! $Segmentation of Securities %arket: Primary Market: Market: It deals with the issuan e !" new se urities# C!m$anies% &!'ernments !r $u(li se t!r instituti!ns an !(tain "undin& thr!u&h the sale !" a new st! k !r (!nd issue# )it deals with new ! whi h makes the new issue !" the se urities e&&* shares %de(enture et #+ Se !ndary Market: The "inan ial market "!r tradin& !" se urities that ha'e already (een issued in an initial $u(li !""erin&# It !m$rises !" the st! k e, han&es whi h $r!'ide a $lat"!rm "!r the $ur hase and sale !" se urities# M!ney market The m!ney market is the market for short term financial instruments! %one# market instruments include Treasur# "ills, "anker&s acceptances, commercial paper, Federal funds, municipal notes, and other securities! The common characteristic of mone# market instruments is that the# all have maturities of one #ear or less, and often '( da#s or less -e$!sit!ry ) s#stem of computeri*ed "ook entr# of securities! This arrangement ena"les a transfer of shares through a mere "ook entr# rather than the ph#sical movement of certificates! )t present, there are two +epositories in India, ,ational Securities +epositor# -imited .,S+-) and Central +epositor# Services .C+S)! ,S+- was the first Indian +epositor#! .+ /!w d!es the -e$!sit!ry System !$erate0 /!lds se urities in a !unts  Trans"ers se urities in a !unts  Trans"ers with!ut handlin& $hysi al se urities  Sa"ekee$in& !" se urities  All the h!lders must si&n the instru ti!n /,)0 1 ,et )sset 0alue: 0alue: The per share price of a mutual fund! Formula of ,)0: Closing price of all securities owned 2 cash 1 lia"ilities ,um"er of outstanding shares +erivatives Financial instruments such as futures and options, which derive their origional value from underl#ing securities egg! Bonds, "ills, currencies, and e3uities!

to "u# the underl#ing stock at a given price . "ut not the o"ligation. i!e5 The period within which "u#ers receive their shares and sellers receive their mone#! !8hat is a settlement y le0****# On the NSE% the y le (e&ins !n 8ednesday and ends !n the "!ll!win& Tuesday% and !n the 9SE the y le !mmen es !n M!nday and ends !n Friday ! 6rocess of trade settlement .through a "roker 8ou give instruction to #our +6 to de"it #our account and credit the "roker9s :clearing mem"er pool.for e3uit# securities) or coupon pa#ment . account Before the pa# in da#.the e4piration date)! The owner is speculating that the option will go up in value and the underl#ing stock will go down in value /ed&in&: )n investment strateg# of lowering risk "# "u#ing securities that have off setting risk characteristics Ar(itra&e: )n act of "u#ing securities in one market and selling in another at higher prices! It takes advantage of a price differential e4isting in the prices of the same commodit# or securit# in two or more different markets! S$e ulati!n: ulati!n: )n act to take high risks for high return! It gives li3uidit# to the market # C!llateral Mana&ement: Mana&ement: Collateral management services are a method of securing a loan with ph#sical commodities! The# are deposited as a pledge or guarantee that the loan will "e repaid at maturit#5 if not paid the commodities ma# "e sold to reim"urse the lender! Settlement C#cle The period within which the settlement is made. hence.the e4piration date)! The owner of the call is speculating that the underl#ing stock will go up in value."onds)) ma# have a direct financial impact on the shareholders!! .selling): 78ou sell securities in an# of the stock e4changes linked to .S+.selling): .the strike price) "# a given time . #our "roker gives instruction to its +6 for deliver# to clearing corporation 8our "roker receives pa#ment from the stock e4change :clearing corporation. 8hat is !r$!rate restru turin&< Corporate restructuring is necessar# when a compan# needs to improve its efficienc# and profita"ilit# and it re3uires e4pert corporate management! ) corporate restructuring strateg# involves the re"uilding of areas within an organi*ation that need special attention from the management and C=>! A !r$!rate a ti!n is an event initiated "# a pu"lic compan# that affects the securities . increasing the value of the option Put O$ti!n ) put option gives the owner the right. to sell the underl#ing stock at a given price .They are &enerally a'aila(le "!r 4 t! 5 m!nths% with s!me l!n&er*term !$ti!ns ) alled LEAPS+ als! a'aila(le "!r sele ted se urities+ 46Call !$ti!n: !$ti!n: 7 Put !$ti!n: !$ti!n: An !$ti!n t! (uy a ertain asset (y a ertain date "!r a ertain $ri e# An !$ti!n t! sell a ertain asset (y a ertain date "!r a ertain $ri e# )I" y!u want in (rie" then read the "!ll!win&+ Call O$ti!n ) call option gives the owner the right.the strike price ) "# a given time .1Futures 2 F!rwards: In'estment !ntra ts whi h s$e i"y the 3uantity and $ri e !" a !mm!dity t! (e $ur hased !r s!ld at a later date# 1 1O$ti!ns: ***** A !ntra t that &i'es the !wner the ri&ht t! (uy !r sell a se urity at a s$e i"i $ri e within a s$e i"i time limit# O$ti!ns an (e "urther lassi"ied as all !$ti!n and $ut !$ti!n# . "ut not the o"ligation.e3uit# or de"t) issued "# the compan#! Some corporate actions such as a dividend .for de"t securities .

!'ernment s$in*!"" Media s$in*!"" Resear h s$in*!""# A !untin& Terms Eeconciliation **is the ad@usting of the difference "etween two items . and a shareholder does not need to do an#thing to get the dividend! There is nothing the Share holder has to do or does in a %andator# Corporate )ction! :!luntary C!r$!rate A ti!n : ) voluntar# corporate action is an action where the share holders elect to participate in the action! )n e4ample of a voluntar# corporate action is a tender offer! ) corporation ma# re3uest share holders to tender their shares at a pre determined price! The shareholder ma# or ma# not participate in the tender offer! Mandat!ry with Ch!i e C!r$!rate A ti!n : ) %andator# with Choice corporate action is a mandator# corporate action where share holders are given a chance to choose among several options! )n e4ample is cash?stock dividend option with one of the options as default! Share holders ma# or ma# not su"mit their elections! In case a share holder does not su"mit the election. or accounts) so that the figures are in agreement! >ften the reasons for the differences must "e e4plained! >ne e4ample would "e reconciling a checking account . %andator# and %andator# with Choice corporate actions! Mandat!ry C!r$!rate A ti!n : ) mandator# corporate action is an event initiated "# the corporation "# the "oard of directors that affects all shareholders! 6articipation of shareholders is mandator# for these corporate actions! )n e4ample of a mandator# corporate action is cash dividend! )ll holders are entitled to receive the dividend pa#ments. amounts. for e4ample. a compan# with 1(( shares of stock priced at AB( per share! The market capitali*ation is 1(( C AB(. or AB(((! The compan# splits its stock D for 1 S$in*O""s ) s$in*!"" is a new organi*ation or entit# formed "# a split from a larger one. statements. such as a television series "ased on a pre e4isting one. or a new compan# formed from a universit# research group or "usiness incu"ator The common definition of spin out is a division of a compan# or organi*ation that "ecomes an independent "usiness! C!r$!rate s$in*!"" . the default option will "e applied!! A st! k s$lit or st! k di'ide increases or decreases the num"er of shares in a pu"lic compan#! The price is ad@usted such that the "efore and after market capitali*ation of the compan# remains the same and dilution does not occur! >ptions and warrants are included!Take.e!g!."ringing the checking ledger and "ank "alance statement into agreement+# Reas!ns "!r Re !n iliati!n: 4+ Che3ues de$!sited int! (ank (ut n!t re !rded in the (ank (!!k# 7+ Che3ues issued (ut n!t $resented in (ank# . "alances.+ 9ank har&es dire tly de(ited "r!m (ank a !unt n!t menti!ned in (ank (!!k# <+ ECS% n!t menti!ned in (ank (!!k# =+ Interested redited int! (ank a !unt n!t menti!ned in (ank(!!k# >+ Che3ues de$!sited n!t leared# A !unts Paya(le This urrent lia(ility a !unt will sh!w the am!unt a !m$any !wes "!r items !r ser'i es $ur hased !n redit and "!r whi h there was n!t a $r!miss!ry n!te# .Ty$es Corporate actions are classified as 0oluntar#.

i!e! electronic and not ph#sical! 8hat is a St! k E.or vise versa) of the same script in the same trading session . on the same da#)! 9lue Chi$ C!m$anies: ) "lue chip stock is the stock of a well esta"lished compan# having sta"le earnings and no e4tensive lia"ilities! NAS-A? : )n acron#m for . han&e0 ) common platform where "u#ers and sellers come together to transact in stocks and shares! 8hat is ele tr!ni tradin&0 6rocess in which! Brokers can trade from their offices. han&e )NSE+ It is a nationwide screen "ased trading network using computers. or has not deposited in a cash account an amount e3ual to the e4ercise value of the call! als! alled uncovered call! opposite of covered call! /ed&in& )n investment strateg# of lowering risk "# "u#ing securities that have offsetting risk characteristics!!! Fedge funds are investment pools that are free to use an# hedging techni3ues the# desire and the# often make large "ets in a relativel# small num"er of different holdings! Intraday Tradin& Intrada# share trading refers to the "u#ing and selling .et profits kept to accumulate in a "usiness after dividends are paid! Cust!dian ) financial institution that has the legal responsi"ilit# for a customer9s securities! This implies management as well as safekeeping! Su"prime ! Su"prime are the "orrowers t#picall# who have low credit scores due to prior "ankruptc#. which is a nationwide network of computers and other electronic e3uipment that connects dealers in the over the counter market across the H!S Nati!nal St! k E.ational )ssociation of Securit# +ealers )utomated Guotations S#stem. home repossession etc Share market is a place where companies list their shares availa"le to common pu"lic for "u#ing I selling! these shares are now mostl# held in demat form. missed loan pa#ments. using full# automated screen "ased processes! Their workstations are connected to a Stock =4change9s central computer via satellite using 0er# Small )perture Terminus .A !unts Re ei'a(le A urrent asset resultin& "r!m sellin& &!!ds !r ser'i es !n redit )!n a Naked all !unt+ -e"initi!n*) short call option position in which the writer does not own the corresponding num"er of shares of the underlier.0S)Ts)! . satellite link and electronic media that facilitate transactions in securities "# investors across India :!latility The measure of the tendenc# of prices to fluctuate widel#! 6rices of small companies tend to "e more volatile than those of large corporations! Beta is a measure of volatilit# 9ear ** ) person who e4pects share prices in general to decline and who is likel# to indulge in SF>ET S)-=S! 9ear Market ) long period of declining securit# prices! 9ull ) person who e4pects share prices in general to move up and who is likel# to take a long position in the stock mark! Retained Earnin&s .

0 )n Inde4 is a comprehensive measure of market trends. de"entures are converted from the JmaterialJ .S=) are the countr#9s two leading =4changes! 8hat is an Inde. or an# sale that is completed "# the deliver# of a securit# "orrowed "# the seller! Short selling is a legitimate trading strateg#! Short sellers assume the risk that the# will "e a"le to "u# the stock at a more favoura"le price than the price at which the# sold short! 8hat is an au ti!n0*** )uction is conducted for those securities that mem"ers fail to deliver?short deliver during pa# in! -emat is a commonl# used a""reviation of +ematerialisation. it means that a share of the face value of Es!1( is split into two shares of face value Es!five each and a person holding one share now holds two shares! 8hat is (uy*(a k0***It is a process "# which a compan# can "u# "ack its shares from shareholders! ) compan# ma# "u# "ack its shares in various wa#s from e4isting shareholders on a proportionate "asis through a tender offer • • from open market through "ook "uilding process from the Stock =4change .+6)! 8hat is the $r! edure "!r the dematerialisati!n !" se urities0***Check with a +6 as to whether the securities #ou hold can "e dematerialised! Then open an account with a +6 and surrender the share certificates! 8hat is AL9M0*** )-B% is an acron#m for automated lending?"orrowing mechanism! It is a stock lending product introduced "# .SCC.S= to "orrow securities?funds to meet their pa# in o"ligations . %um"ai ...ational Securities Clearing Corporation -imited) with the primar# o"@ective of providing a window for trading mem"ers of . time at which the trade was transacted and the "rokerage rate 8hat is a (!!k* l!sure2re !rd date0 Book closure and record date help a compan# determine e4actl# the shareholders of a compan# as on a given date ! S$lit is "ook entr# wherein the face value of the share is altered to create more num"er of shares outstanding without calling for fresh capital or without altering the share capital account! For e4ample if a compan# announces a two wa# split.BS=) and the . intended for investors who are concerned with general stock market price movements 8hat is a !ntra t n!te0 ) contract note descri"es the rate. whether on or off the Stock =4change or through spot transactions or through an# private arrangement! 8hat is sh!rt sellin&0****It is a sale of a securit# that the seller does not own.from odd lot holders ) compan# cannot "u# "ack its shares through negotiated deals. which is a process where"# securities like shares..ational Stock =4change .paper documents) into electronic data and stored in the computers of an electronic +epositor#! 8ou surrender material securities registered in #our name to a +epositor# 6articipant . han&es are there in India0 The Stock =4change. date./!w many E.

+) period for that securit#! 8hat is (ad deli'ery0** Bad deliver# e4ists onl# when shares are transferred ph#sicall#! In J+ematJ "ad deliver# does not e4ist! Khat is =6S.8hat is a r!llin& settlement***0 The rolling settlement ensures that each da#9s trade is settled "# keeping a fi4ed gap.% !r FC+ is where currenc# trading takes place! It is where "anks and other official institutions facilitate the "u#ing and selling of foreign currencies T#pes of Bonds agencies! Lovernment Bonds: These are fi4ed income de"t securities issued "# the Corporate Bonds: These are de"t instruments issued "# a compan# and government! %unicipal Bonds: These are de"t securities issued "# state governments and their "acked "# its a"ilit# to generate profits 8hat is a C!mm!dity Market0 ) commodit# market is a place where the e4change of primar# or raw products happens in regulated commodit# e4changes . "onus.cash or stock) included in the contract price! 8hat is an e. 6?=. "etween a trade and its settlement.*di'idend date0****The date on or after which a securit# "egins trading without the dividend .. it offers it to the pu"lic directl#! 8hat is 9!!k 9uildin&0 Book Building is a process used for marketing a pu"lic offer of e3uit# shares of a compan# and is a common practice in most developed countries! Book Building is so called "ecause the collection of "ids from investors are entered in a J"ookJ! 8hat is an e. dividend announced for which "ook closure?record date is fi4ed.+Market 'alue t! (!!k 'alue rati! )M:29: rati!+: It is the rati! (etween the market $ri e !" a se urity and 9!!k :alue !" the se urity# #9!nus Shares*******. han&e market ) urren y% "!re.*date0****The first da# of the no deliver# period is the e4 date! If there is an# corporate "enefits such as rights. the "u#er of the shares on or after the e4 date will not "e eligi"le for the "enefits! 8hat is a n!*deli'ery $eri!d0**Khenever a compan# announces a "ook closure or record date.istin& e3uity shareh!lders# F!rei&n e. B0 and %0?B0< share and earning per share! . of a specified num"er of working da#s! )t present this is five working da#s after the trading da#! 8hat is an IPO0 )n I6> is an a""reviation for Initial 6u"lic >ffer! Khen a compan# goes pu"lic for the first time or issues a fresh stock of shares.i'en as (!nus "ree t! e. the =4change sets up a no deliver# .6?=): 6rice earning multiple is ratio "etween market value per 7+9!!k :alue )9:+: )!" a !mm!n share+ The !m$any@s Net w!rth )whi h is $aid*u$ a$ital A reser'es B sur$lus+ di'ided (y num(er !" shares !utstandin&# .

6resent 0alue of >utflow of Cash) . is an Hinde. swaps and other derivative markets! Net Present :alue )NP:+ . which charge a performance fee! Fedge funds are different from the mutual funds.In'estment (ankin& :! The role of the investment "ank is to issue and sell securities in the primar# market on "ehalf of the international companies! /ed&e Funds : Fedge funds are "asicall# investment funds.ed maturity $eri!d! Investors can convenientl# "u# and sell units at Net Asset :alue )NA:+ related prices which are declared on a dail# "asis! The ke# feature of open end schemes is li3uidit#! A l!se*ended Mutual "und has a stipulated maturit# period e!g! B N #ears! The fund is open for su"scription onl# during a specified period at the time of launch of the scheme! Investors can invest in the scheme at the time of the initial pu"lic issue and thereafter the# can "u# or sell the units of the scheme on the stock e4changes where the units are listed! The Sense.ift# is an indicator of all the ma@or companies of the NSE# .et 6resent 0alue M .60 helps to measure the value of a currenc# toda# with that of the future. after taking into consideration returns and inflation 8hat -!es Equity Mean0***1! ) stock or an# other securit# representing an ownership interest -e"lati!n:*****In e !n!mi s% de"lati!n is a de rease in the &eneral $ri e le'el !" &!!ds and ser'i es#D4E -e"lati!n ! urs when the annual in"lati!n rate "alls (el!w Fer! $er ent% resultin& in an in rease in the real 'alue !" m!ney G a ne&ati'e in"lati!n rate N!wadys shares are $ur hased and s!ld !nline whi h is alled E*(r!kin&# Imm!(iliFati!n !" se urities *****means shares are ke$t with de$!sitary (ut (uyin& and sellin& !" se urities takes $la e with!ut $hysi al m!'ement !" se urities Mutual Fund Mutual Fund Mutual Fund is a in'estment !m$any that pools mone# from shareholders and invests in a variet# of se urities% su h as st! ks% (!nds and m!ney market instruments %ost open end mutual "unds continuousl# offer new shares to investors! )n !$en*ended Mutual "und is one that is availa"le for su"scription and repurchase on a continuous "asis! These Funds do not have a "i. pension funds and insurance companies! Fedge funds can deal with the futures.6resent 0alue of Inflow of Cash) 1 .J! Khat is an inde4< )n inde4 is "asicall# an indicator! It gives #ou a general idea a"out whether most of the stocks have gone up or most of the stocks have gone down! The Sense4 is an indicator of all the ma@or companies of the 9SE! The .

e ute an !rder0 Sele t a (r!ker !" y!ur h!i e and enter int! a (r!ker* lient a&reement and "ill in the lient re&istrati!n "!rm# Pla e y!ur !rder with y!ur (r!ker $re"era(ly in writin&# .ed in !me se urities <#The (!nd market )als! kn!wn as the de(t% redit% !r "i.ed in !me market+ is a "inan ial market where $arti i$ants (uy and sell de(t se urities% usually in the "!rm !" (!nds =#The Lia(ilities side !" the (alan e sheets sh!ws the s!ur es !" in !me int! the (usiness and the Assests side sh!ws h!w the in !me has (een utiliFed > /!w d!es !ne e. han&e !ne stream !" ash "l!ws a&ainst an!ther stream# These streams are alled the legs !" the swa$# T/EIare !ntra ts t! e. han&e ash )"l!ws+ 7 #Fi.e uted and ask "!r the !ntra t n!te at the end !" the trade date# J#8hy d!es !ne need a (r!ker0 !$erate in the st! k market# -eal an (e d!ne !nly thr!u&h a re&istered (r!ker !" a re !&nised St! k E.ed in !me se urities 9!nds% $re"erred st! k% and treasury (ills that &enerate a s$e i"ied am!unt !" in !me !'er a ertain $eri!d#% and are !nsidered l!w*risk in'estments# als! alled "i.et a trade !n"irmati!n sli$ !n the day the trade is e.MM milli!n is Mi r! a$%***Small Cap: N. and derivatives of same5 "oth of these are securities listed on a stock e4change as well as those onl# traded privatel#! The term Jstock marketJ refers to the "usiness of "u#ing and selling stock! 1!Swa$s In "inan e% a swa$ is a deri'ati'e in whi h tw! !unter$arties a&ree t! e.MM milli!n * N7 (illi!n%*** %id Cap: N7 * N4M (illi!n% Big Cap: N4M * 7MM (illi!n 44#8h! is a -e$!sit!ry Parti i$ant0 ***** Me&a Cap: N7MMA (illi!n As $er SE9I )Se urities and E. han&e 9!ard !" India#+ re&ulati!ns% !nly re&istered mem(ers an . han&e !r thr!u&h a SE9I* re&istered su(*(r!ker K#8hat is the di""eren e (etween (!!k l!sure and re !rd date0 In ase !" a re !rd date% the !m$any d!es n!t l!se its re&ister !" se urity h!lders# Re !rd date is the ut !"" date "!r determinin& the num(er !" re&istered mem(ers wh! are eli&i(le "!r the !r$!rate (ene"its# In ase !" (!!k l!sure% shares ann!t (e s!ld !n an E.St! k market Stock market is a market for the trading of compan# stock. >F eg N=M * N. han&e (earin& a date !n the trans"er deed earlier than the (!!k l!sure# 5#8hat are !m$any !(Le ti!ns0 A list d! umentin& reas!ns (y a !m$any "!r n!t trans"errin& a share in the name !" an in'est!r is alled !m$any !(Le ti!ns# ReLe ti!n ! urs due t! a si&nature di""eren e% !r "ake shares# 4M#8hat are mi r!* a$% small* a$% mid* a$% lar&e* a$ !m$anies0TF= C> KFICF F)S %)EO=T C)6IT)-IS)TI>.

han&e (earin& a date !n the trans"er deed earlier than the (!!k l!sure# Cl!sin& st! k in trial (alan e The reas!n why l!sin& st! k is n!t taken int! a !unt in a trial (alan e is (e ause a trial (alan e is a (alan e !" all led&er a !unt a &i'en $!int in time#It re !rds !nly transa ti!ns whi h ha'e a tw! way e""e t 9ut l!sin& st! k is n!t a transa ti!n ha'in& a tw! way e""e t any &i'en $!int in time#It is !nly an indi ati!n !" the &!!ds lyin& in the "a t!ry at the end !" the yea 8ind!w -ressin& A strate&y used (y mutual "und and $!rt"!li! mana&ers near the year !r 3uarter end t! im$r!'e the a$$earan e !" the $!rt"!li!2"und $er"!rman e (e"!re $resentin& it t! lients !r shareh!lders# Outstandin& he ks are he ks that ha'e (een written and re !rded in the !m$any@s Cash a !unt% (ut ha'e not yet leared the (ank a !unt# An NSF he k is a he k that was n!t h!n!red (y the (ank due t! insu""i ient "unds NSF is the a r!nym "!r n!t su""i ient "unds# N!tes Re ei'a(les are assets !" a !m$any# 8hen n!tes !me due% the !m$any mi&ht ask its (ank t! !lle t the n!te re ei'a(le .In India% a -e$!sit!ry Parti i$ant )-P+ is des ri(ed as an a&ent !" the de$!sit!ry# They are the intermediaries (etween the de$!sit!ry and the in'est!rs# Similar t! the (r!kers wh! trade !n y!ur (ehal" in and !utside the St! k E. han&eO 47#8hat is e3uity0 Funds (r!u&ht int! a (usiness (y its shareh!lders is alled e3uity# It is a measure !" a stake !" a $ers!n !r &r!u$ !" $ers!ns startin& a (usiness 8hat is the di""eren e (etween (!!k l!sure and re !rd date0 In ase !" a re !rd date% the !m$any d!es n!t l!se its re&ister !" se urity h!lders# Re !rd date is the ut !"" date "!r determinin& the num(er !" re&istered mem(ers wh! are eli&i(le "!r the !r$!rate (ene"its# In ase !" (!!k l!sure% shares ann!t (e s!ld !n an E.

is an inde. is al ulated# !rdin&ly the .$en es and l!ses are $!sted in in !me statement# 4=#8hat is de$re iati!n and the meth!d0 -e$re iati!n is the wear and tear use !" the asset# Ty$es are: Strai&ht line Meth!d and 8ritten d!wn 'alue meth!d 4K#/!w 4K#/!w is SENSEC al ulated0 ulated0 Sense. ways: 4# Assets P Lia(ilities A Owners@ E3uity 7# Lia(ilities P Assets * Owners@ E3uity .$ense a !unts# !unts# The A The a !untin& E3uati!n really is: !untin& e3uati!n an (e e.enerally A e$ted A !untin& Prin i$les 4<#8hat kinds !" items are $!sted in the In !me statement0 statement0 In !me statement% als! alled $r!"it and l!ss statement )PBL+ and Statement !" O$erati!ns% is a !m$any@s "inan ial statement that indi ates h!w the re'enue )+ is trans"!rmed int! the net in !me all in !me%e.#8hat is .e uti!n !" the "reeFe instru ti!n (y the -P% the status !" the a !unt will han&e t! RSus$ended "!r -e(it@! 4.4# The (ank will $r! ess this de$!sit !n the m!rnin& !" Se$tem(er 4# As !" Au&ust .4 int! the (ank@s ni&ht de$!sit!ry at 4M:MM $#m# !n Au&ust .#8hat 4.# Owners@ E3uity P Assets Q Lia(ilities There are = ty$es !" A !unts# 4+ Assets 7+ Lia(ilities .-e$!sits in transit are am!unts already re ei'ed and re !rded (y the company% (ut are n!t yet re !rded (y the bank# F!r e.$ressed in .AAP0 * *.4 )the (ank statement date+ this is a de$!sit in transit# Finan ial Statements The 9alan e Sheet lists the (alan es in all Asset% Lia(ility and Owners@ E3uity a The In !me Statement lists the (alan es in all Re'enue and E. whi h sh!ws whether the st! ks ha'e &!ne u$ !r &!ne d!wn and a sense.$enses FE==P= A demat a !unt h!lder may "reeFe the a !unt !nly "!r de(its (y su(mittin& a "reeFe instru ti!n t! its -P# On e.am$le% a retail st!re de$!sits its ash re ei$ts !" Au&ust .+ Owners@ E3uity )St! kh!lders@ E3uity "!r a !r$!rati!n+ <+ Re'enues =+ E.

+ Finan in& * CF "r!m in'est!rs !r l!n&*term redit!rs Ty$es !" Cash Fl!w Statement There are tw! ty$es !" Cash Fl!w Statement whi h y!u will !me a r!ss% these are: • • A tual Cash Fl!w Statements%** these sh!w an hist!ri 'iew% sh!win& the a tual "l!ws !" ash int! urred !'er a $re'i!us tradin& $eri!d% e#&# > m!nths% !r 4 year# Or a F!re ast Cash Fl!w Statement **sh!win& the e.istin& names ann!t (e deleted ! 7<#8hat is transmissi!n* um*demat0 um*demat0 Transmissi!n* um*demat "a ility ena(les an in'est!r t! dematerialiFe se urities held in L!int names in a 9O a !unt !$ened in the names !" same L!int h!lders in the e'ent !" death !" a L!int h!lder# and !ut !" a (usiness that ha'e ! . ty$es !" ash "l!w )CF+: 1+ O$eratin& * CF &enerated (y n!rmal (usiness !$erati!ns 7+ In'estin& * CF "r!m (uyin&2sellin& assets: (uildin&s% real estate% in'estment $!rt"!li!s% e3ui$ment# .J#8hat are the ty$es !" ash "l!ws0 The Statement !" Cash Fl!ws is the third "inan ial statement re3uired (y .$e ted "l!ws !" ash int! and !ut !" a (usiness !'er a tradin& $eri!d in the immediate "uture% e#&# ne.t > m!nths !r year# 45#8hat is ISIN0 An )ISIN+ ISIN stands "!r Internati!nal Se urity Identi"i ati!n Num(er# An a !unt h!lder may "reeFe a $arti ular ISIN )se urity !" a s$e i"i !m$any+ "r!m (ein& de(ited "r!m the a !unt% with!ut "reeFin& the wh!le# 7M#8hat 7M#8hat is Insider Tradin&0 Insider tradin& is the tradin& !" a !r$!rati!n@s st! k !r !ther se urities )e#&# (!nds !r st! k !$ti!ns+ (y indi'iduals with $!tential a ess t! n!n*$u(li in"!rmati!n a(!ut the !m$any# In m!st !untries% tradin& (y !r$!rate insiders su h as !""i ers% key em$l!yees% dire t!rs% and lar&e shareh!lders may (e le&al% i" this tradin& is d!ne in a way that d!es n!t take ad'anta&e !" n!n*$u(li in"!rmati!n# 7.#8hat is trans$!siti!n* um*demat0 Trans$!siti!n* um*demat "a ility ena(les an in'est!r t! trans$!se names !" the L!int h!lders in desired !rder al!n& with the $r! ess !" dematerialisati!n !" erti"i ates## Illustrati'ely e&& # i" A !wns a se urity% whi h he h!lds in the L!int names !" A9C% AC9% et # he an "irst trans$!se them in the name !"% say% A9C in whi h !rder demat a !unt mi&ht ha'e (een !$ened# N! new name an (e added thr!u&h trans$!siti!n $r! ess# Similarly% e.AAP% "!r "ull dis l!sure# The Cash Fl!w statement sh!ws the in"l!ws and !ut"l!ws !" Cash !'er a $eri!d !" time% usually !ne year# There are .

. han&e# @O"" Market Trade@ is !ne whi h is settled dire tly (etween tw! $arties with!ut the in'!l'ement !" learin& !r$!rati!n! 7>#8hat 7>#8hat settlement details are re3uired !n the deli'ery instru ti!n sli$0 sli$0 On e'ery st! k e.7=#8hat d! y!u mean (y @Market Trades@ and @O"" Market Trades@0 Any trade settled thr!u&h a learin& !r$!rati!n is termed as the @Market Trade@# These trades are d!ne thr!u&h st! k (r!kers !n a st! k e. han&e 'ari!us settlements are e""e ted e'ery day su h as weekly settlement% daily settlement% au ti!n settlement et # Ea h !" these settlements is identi"ied (y the !m(inati!n !" the market ty$e and the settlement num(er# I!u are re3uired t! menti!n the a$$r!$riate settlement details !n the deli'ery instru ti!n sli$ while trans"errin& the shares t! y!ur (r!ker@s a !unt# These settlement details are a'aila(le !n the !ntra t n!te issued (y the (r!ker! 7J#8hat is TA7 r!llin& settlement y le TA7 means that trades are settled tw! w!rkin& days a"ter the day the trade takes $la e# F!r instan e% trades takin& $la e !n M!nday are settled !n 8ednesday% Tuesday@s trades settled !n Thursday and s! !n# .M#Ty$es !" Ca$ital Market0 Ca$ital Markets : The a$ital market )se urities markets+ is the market "!r se urities% where !m$anies and the &!'ernment an raise l!n&*term "unds# The a$ital market in ludes the st! k market and the (!nd marketty$es are#Primary Markets: Se !ndary Market:! .#/!w many times an !ne (uy and sell within a settlement y le0 It@s $!ssi(le t! (y and sell within a settlement y le many times% whi h is what traders d!# They settle !nly their net !utstandin& $!siti!ns at the end !" the y le# In !ther w!rds% the settlement is made "!r the net !utstandin& $!siti!ns at the end !" the settlement y le# ! ! .