Returns and Risks involved in Bonds – Part 2
In the previous article on Bonds – Part 1, we discussed the basics of Bonds and some important terms related to bonds. We also mentioned… Read More »Returns and Risks involved in Bonds – Part 2
Harshini G
What Are Bonds And What Happens When It Is Traded? – Part 1
In one of our previous articles on How a company raises capital, we discussed raising capital using two methods. One is equity and the other… Read More »What Are Bonds And What Happens When It Is Traded? – Part 1
What is IPO and different types of investors:
In the previous article, we discussed the debt and equity instruments used to raise capital for a company. When the owner of the private company… Read More »What is IPO and different types of investors:
Why Value of money decreases due to Inflation and the importance of saving money!
Inflation causes the value of money in your hand to decrease. In simple terms, take a basket of goods in your home and think how… Read More »Why Value of money decreases due to Inflation and the importance of saving money!
Normal Contango and backwardation
Contango and Backwardation is used in the commodity market. This is two different situation based on the spot price and future price. Before going into… Read More »Normal Contango and backwardation
Repo and Reverse Repo Rate
We all know that the Reserve Bank of India (RBI) is the Central bank of India. Repo rate is the rate at which the commercial banks can borrow money from the central bank. And reverse repo rate is the rate at which the commercial banks deposit money at the central bank (RBI). Repo is a short form of repurchase agreement. This is an exchange of money for Bond between commercial banks and the central bank.
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Credit Risk
Let’s discuss what does Risk means. Risk is simply called uncertainty. For example, when you lend money to your friend and there is a risk when you are not sure about getting back since he lost his job recently.
Similarly, when you consider banking, their main business is to make people deposit in their bank and lend money to others. Credit risk arises due to uncertainty of collecting back the money from borrowers. Credit risk can be high when the credit quality of the borrower is low. Due to lower credit quality and non-repayment of borrowed loans, Banks can expect losses. These losses are calculated as Expected Loss
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