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Group No. Nishit Kumar F2F- 42 Vishal Kumar F2F- 43 Kewal Varu F2F- 57 Devi Prasad F2F- 58
MUTUAL FUNDs
Mutual funds are money-managing institutions that pool money from the public and invest it in capital market such as stocks, bonds and other securities. Mutual Fund offer liquid funds and ultra short term funds in the debt category, which are suitable for short investment periods. Ultra short-term funds were earlier known as liquid plus funds. Liquid funds invest in money market instruments with a maturity of 91 days or less. However, there are no such restrictions for ultra short-term funds.
MONEY MARKET
As money became a commodity, the money market became a component of the financial markets for assets involved in short-term borrowing, lending, buying and selling with original maturities of one year or less. Different instruments in money market are: Treasury bills Certificate of deposits Commercial papers.
Certificate Of Deposit - CD
A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate and can be issued in any denomination. CDs are generally issued by commercial banks and are insured by the FDIC. The term of a CD generally ranges from one month to five years. A certificate of deposit is a promissory note issued by a bank. It is a time deposit that restricts holders from withdrawing funds on demand. Although it is still possible to withdraw the money, this action will often incur a penalty. For example, let's say that you purchase a 10,000 CD with an interest rate of 5% compounded annually and a term of one year. At year's end, the CD will have grown to 10,500 (10,000 * 1.05). CDs of less than 100,000 are called "small CDs"; CDs for more than 100,000 are called "large CDs" or "jumbo CDs". Almost all large CDs, as well as some small CDs, are negotiable.
Commercial Papers
The commercial paper is a debt instrument used for raising shortterm funds by the Corporates. It is issued for a shorter period of time for example 6 months, 1 years. CPs are very common in Market. CPs are rated by Credit rating companies.
Equity Market
A equity market is a public entity for the trading of company stock and derivatives at an agreed price. The securities are listed on stock exchanges. Examples of some of the common stocks which are traded daily are: Infosys- Rs.2350 per share. Reliance industrial infrastructure limited- Rs.496 per share. TCS- Rs.1299 per share. Steel Authority of India Ltd. (SAIL)- Rs.95.25 per share. Oil and Natural Gas Corporation Ltd.(ONGC)- Rs.238.30 per share.
(Interest rates as on 7th September 2012 on a per annum basis for a 181 day tenure) The table above lists rates offered by some of the leading banks. While company deposits offer higher returns, investing in the same entails taking on higher risks since they are unsecured in nature.
Hence only fixed deposits with a high level of safety have been considered for the purpose of this study. In the example above, the investor would at best earn a return of 6.50 per cent per annum.
Existing Rates Revised rates Existing Rates Revised rates w.e.f. w.e.f. w.e.f. w.e.f. 07.08.2012 07.09.2012 07.08.2012 07.09.2012
7.00 7.00 7.00 7.25 6.50 6.50 6.50 6.50 8.00 8.00 8.00 8.00 7.50 7.50 7.50 7.50
7.50
6.50
8.00
7.50