MUTUAL FUND

A mutual fund is a professionally managed investment scheme, usually run by an asset management
company that brings together a group of people and invest their money in stocks, bonds and other
securities.
All mutual funds are registered with SEBI . They functions within the provisions of strict regulations
created to protect the interest of investors.
As an investor, you can buy mutual fund ‘unit’ which basically represent your share of holdings in a
particular scheme. These units can be purchased or redeemed as needed at the fund’s current net asset
value (NAV).
TYPES OF MUTUAL FUNDS:-
Gilts Funds:- Invest in government securities they do not have the default risk because the bonds are
issued by the government.
Large cap fund:- Invest mostly in big companies. Funds identify these companies by their market
capitalization.
Diversified Funds :- Invest across market capitalization , depending on the market view of the fund
manager.
Mid cap fund:- Invest mostly in medium sized companies. These companies can be risky as they may or
may not release their full potential.
Small cap fund:- Invest in small companies these companies can be extremely risky, as their will be very
little information about them available in the public domain. However, they can also offer phenomenal
return. They are suitable only for investors with a very risk appetite.
Short term Fund:- Invest mostly in debt securities with an average maturity of one to three years.

BONDS
A bond is a debt investment in which an investor loans money to an entity which borrows the funds for a
defined period of time at a variable or fixed interest rate. Bonds are used by companies , municipalities,
states and sovereign government to raise money and finance a variety of projects and activities.
When companies or other entities need to raise money to finance new projects, maintain ongoing
operations they may issue bonds directly to investors instead of obtaining loans from a bank .
CATEGORIES:-
Corporate bonds are issued by the companies.
Municipal bonds are issued by states and municipalities.
Treasuries:- which includes U.S treasury bonds (more than 10 years of maturity )
Notes( 1-10 years of maturity)
Bills (less than 1yrs of maturity)
TYPES OF BONDS:-
Callable Bonds:- Callable bond , also known as “redeemable bonds” can be redeemed by the issuer prior
to maturity.
Amortized Bonds:- Amortized bond is a financial certified that has been reduced in value for records on
accounting statements.
Corporate Bonds:- A company can issue bonds just as it can issue stock. Large corporations have lot of
flexibility as to how much debt they can issue, the limit is whatever the market will bear.
Short term corporate Bond have maturity of less than five years
Intermediate corporate bond have maturity of 5-12 years
Long term corporate bond have maturity of more than 12 years

DEPRECIATION
Depreciation is defined as the reduction of recorded cost of fixed assets in a systematic manner until the
value of the assets become zero.
An example of fixed assets are building , furniture, office equipment, machinery etc.Aland is the only
exception which cannot be depreciated as the value of land appreciates with time
Example :-
If a delivery truck is purchased by a company with cost of rupees 100000 and the expected usage of the
truck is 5 years, the business might depreciate the assets under depreciation expense as rupees 20000
every year for a period of 5 years.

Methods of depreciation:-
1) Straight line method
2) Unit of production method
3) Double declining balanced method

DEBENTURES
Debentures are debt instruments issued by companies to raise their funds for short or medium term.
Which means a company can fulfill their short/medium term financial needs by taking loan from the
general public by issuing debt instrument, called as debentures. Investors get a fixed rate of interest
known as coupon rate in the form of return on their investment in debentures periodically.
Debentures are freely transferable but having a debentures does not make you a shareholder and you
do not have the right to vote in the general meetings of the company.

TYPES OF DEBENTURES:-
Secured Debentures:- Secured debentures are secured against the security of fixed assets of the
company. Which means if the company will not be able to repay the amount of loan taken from the
investor, his assets can be sold to repay the liability of the investor.
Unsecured Debentures:- As name suggests these type of debentures are not secured against any
company assets, which means there is no obligation on the company to repay the amount back to the
investor when debenture come due.
Convertible Debentures:- As name suggest these type of debentures can be converted either into
equity shares or any other security at a later date. These debentures are either fully or partly convertible
depending upon the terms and conditions of the debentures.
Non-convertible Debentures:- The debentures which cannot be converted into any other securities or
shares are called as Non- convertible Debentures.
Redeemable Debentures:- These are the debentures which are issued for a fixed period. The principal
amount of such debentures is paid off to the holders on the expiry of such period.
Non-Redeemable Debentures:- These are debentures which are not redeemed in life time of the
company. Such debentures are paid back only when the company goes to liquidation.

DERIVATIVES
A derivative is a financial instrument whose value is derived from the value of another assets, which is
known as underlying.
When the price of underlying changes the value of derivatives also change.
Derivative is not a product it is a contract which derives its value from the changes in the price of
underlying.
Example:- The value of gold future contract is derived from the price of underlying i.e. Gold
TYPES OF TRADERS:-
Hedger:- A person who face risk associated with the price movement of the assets, uses derivatives as a
mean of reducing risk. Hedger provides economics balance to the market.
Speculator:- A person who enters the future market for the purpose of getting profit with accepting
risks. Speculator provides liquidity and depth to the market.
Arbitrageur:- Is the person who enters simultaneously into the transaction in one or more transactions
to take advantage of the discrepancies between prices in these market. Arbitrageur brings about price
uniformity and discovery.
TYPES OF DERIVATIVES:-
1)Future 2) Forward 3) Option 4) Swap

CAPITAL MARKET
Capital market is a market where buyers and seller engage in trade of financial securities like bonds,
stocks, etc. The buying/selling is undertaken by participants such as individuals and institutions. capital
market is a market in which money is provided for period longer than a year.
Capital market consists of primary market and secondary market. Primary markets deals with trade of
new issues of stocks and other securities, whereas secondary market deals with the exchange of existing
of previously issued securities. Another important division in the capital market is made on the basis of
the nature of security traded i.e. stock market and bond market.

PRIMARY MARKET
The primary market is also known as new issues market . Here, the transaction is conducted between
the issuer and the buyer in short, the primary market creates new securities and offers them to the
public.
For instance, Initial public offering (IPO) is an offering of the primary market where a private company
decides to sell stocks to the public for the first time. An important point to remember here is that in the
primary market , securities are directly purchased from the issuer.
Capital or equity can be raised in primary market by any of the following four ways:-
1)Public issue:- Selling securities to public at large amount.
2)Right issue:- The shares have to be offered to present shareholders on pro-rata basis.
3)Private placement:- This is about selling securities to restricted number of classy investors like
frequent investors, venture capital funds, mutual funds and bank comes under private placement.
4)Preferential Allotment:- When a listed company issues equity shares to a selected number of
investors at a price that may or may not be pertaining to the market price is known as preferential
allotment.

SECONDARY MARKET
In secondary market , the securities issued in the primary market are bought and sold. Here, you can buy
a share directly from a seller and the stock exchange. The secondary market is actually formed by
another layer of investors who deals with primary market investors to buy and sell financial securities
such as bonds and stocks.
Secondary market is further divided into two kinds of market :-
Auction Market:- The auction market is a place where buyers and sellers convene at a place and
announce the rate at which they are willing to sell or buy securities.
Dealer Market:- In dealer market, none of the parties convene at a common location. Instead buying
and selling of securities happened through electronic network which are usually fax machines,
telephones etc.

BANK RECONCILIATION STATEMENT

Bank reconciliation statement is a summary of banking and business activity that reconciles the entity’s
bank accounts with its financial records. The statement outline the deposits, withdrawls, and other
activity impacting a bank account for a specific period.
A bank reconciliation statement is a useful financial internal control tool used to detect fraud.
Bank Reconciliations statements ensure payments have been processed and cash collection have been
deposited into the bank . The reconciliation statements helps to identify difference between the bank
balance and book balance in order to process necessary adjustment or corrections.

NATIONAL STOCK EXCHANGE

The national stock exchange of india limited is the leading stock exchange of india located inmumbai.
NSE was established in 1992. NSE offers trading, clearing and settlement services in equity, equity
derivatives, debt and currency derivatives segment. It is the first exchange in india to introduce
electronic trading facilities.

BOMBAY STOCK EXCHANGE

The Bombay stock exchange is an indian stock exchange located at dalal street , kala ghoda, Mumbai.
BSE established in 1875. BSE is the Asia’s first stock exchange .

SENSEX
Sensex is the benchmark index of Bombay Stock Exchange. It is composed of 30 of the largest and most
actively traded stocks on the BSE. Compiled in 1986 and the sensex is the oldest stock index in india.
 SECURITIES AND EXCHANGE BOARD OF INDIA
Securities and exchange board of India is the regulator for the securities market in India. Established in
the year 1988, and got statutory powers on 1992.
Roles of SEBI:-
Protect the interest of investor.
Promote the development of stock exchange.
Regulate the activities of stock market.
To provide license to dealers and brokers .
To control the merger, acquisition and takeover of the companies.

HEDGE FUNDS
Hedge funds is an investment fund that pools capital from accredited individuals or institutional
investors and invest in a variety of assets, hedge funds are made available to certain accredited
investors and cannot be offered or sold to general public.

HEDGING
A risk management strategy used in limiting or offsetting probability of loss from fluctuations in the
price of commodities, curriencies or securities. Hedging is used also in protecting one’s capital against
effects of inflation through investing in bonds, shares.

GOLDEN RULES
Personal Account related to individuals , firms, associations or companies.
Debit the receiver, credit the giver

Real accounts related to all assets and properties

Debit what comes in , credit what goes out

Nominal accounts related to expenses, losses income and gains

Debit all expenses and losses , credit all incomes and gains

E-MAIL WRITING
TO:- Team Leader
CC:- ----------
Subject:- Application for 10 days leaves.

Sir/Mam
I Akash Mishra from accounts team want 10 days leaves because my uncle is not well and is admitted to the hospital. He is
suffering from typhoid. Doctor has recommended several test for him, I need to be with my uncle for all his test .
I would like to have your approval for leaves, and my all outstanding and pending work would be done by me before I go for
leaves.

Regards
Akash Mishra