MUTUAL FUND: (Ratio: - Securities(60) : Govt.

(40))
- An organization that collects savings of the Public for the purpose of investing in Securities (Debt/Equity).

MF
Issue

pools

Savings

of

Small Investors

that r unable

to Construct Portfolio

Manages

Securities (Units) Well Diversified Portfolio invest. Different Securities

MF Forms

Sponsor

Trustees

Assets Mngt. Comp.

Custodian

MF

Open Ended Issue Unlimited No. of Shares

Closed Ended issue rarely New Share after IPO

Ready to Offer & Purchase Shares at any time e.g. UTI: UNIT 1964 e.g. Reliance, SBI, ICICI, HDFC, TATA etc.

Not Ready to Re-purchase its own Shares Redeemed at the end of its life

NAV (Net Asset Value) per share: Market Value of all owned Securities Liabilities 1

Computation of Assets = No. of Outstanding Shares (Issued + Sold)

MONEY MARKET: (Working Capital Finance)

- It is a market for dealing in Monetary assets of Short-term nature, generally less than a year.

MM raises Short-term Funds deployment of Excess funds for returns.

for temporary shortage of cash and obligations;

Use: - A reasonable access to the Users of short term funds to meet their requirements at reasonable price/cost.

MM

Treasury Bills Market

CP Market

CD Market

Call Market

Commercial Bills Market

Repo Market (Repurchase)

Capital Market:
- Market for Long-term funds - Focus on fixed Investments. Capital Market

MF

Insurance Comps.

FII

Corporates

Individuals

Types: 1. Primary Market: - Deals in new securities i.e. Securities that were not previously available & offered for the first time. - No Organizational Setup. - Recognized by the Specialist Institutional Services that it tenders to buyers/sellers. Three Functions Origination Investigation Analysis Processing Underwriting Distribution

2. Secondary Market: - Market for old/existing securities i.e. those already issued & granted SE Quotation/Listing. Warrants (Sweeteners): A Warrant is a Security which entitles the holder to purchase a specified no. of shares at a stated price before a stated date/period. They are issued either with Debentures or Equity shares.

Indirect Securities/ Financial Assets: Financial Assets issued by financial intermediaries such as: Units of MFs; Policies of Insurance Companies; Deposits of Banks.

Derivatives: - A Product whose value is derived from the value of one or more basic variables called Base (Underlying Assets: Equity, Forex, any other assets/ index/ reference rate)

Price of Derivative

is driven by

Post Price of the asset price, which is underlying.

MANAGEMENT ACCOUNTING:
- Presentation of Accounting Information of Policy & day-to-day operations.
in a way

to assist management in creation

Book-Keeping: - Recording Business Transactions in the Books of Accounts ==> Books for entering transactions.

Debtor: - A person owes us something.

e.g. - I have to receive money from Mr. X, then Mr. X - My Debtor.

Creditor: - A person to whom we owe something.

e.g. I have to pay money to Mr. X, then Mr. X- My Creditor.

Assets: - Traders Total Possessions- Buildings, Goods, Cash, Machinery etc. Liabilities: - Dues payable to outsiders. Capital: - Assets- Liabilities
Money/Moneys Worth Estates & Properties. A Proprietor
brings

into business

from

Private

Drawings: Money/Moneys Worth A Proprietor

withdraw

from business.

Solvent Person/ Solvency:

A Person whose: Assets > Liabilities e.g. Rs. 50,000 > Rs. 20,000.

Insolvent Person/ Insolvency:

4

A Person whose: Assets < Liabilities e.g. Rs. 5,000 < Rs. 10,000.

Discount (An Allowance from Catalogue Price/ ales Price)

Trade Discount Allow. from Catalogue Price Wholesaler to Retailer Never appears in Book

Cash Discount Allow. from Sales Price Recover from Debtors Appears in Book.

Depreciation: - loss/reduction in the value of assets due to laps of time, wear & tear.
An Expense ----- since ----- Assets provide Service.

Capital Expenditure: - - Increases quantity of Fixed Assets.

- Results in replacement of Fixed Assets.

Revenue Expenditure: - - Amount spend to earn Revenue

- Expenses of Administration, Salaries, rent, Insurance, Stationery and Depreciation of FA.