Definition: The Black-Scholes Model is the options pricing model developed by Fischer Black, Myron Scholes, and Robert Merton, wherein the formula is used to calculate the theoretical price of the European call and put option based on five determinants: Stock price, strike price, volatility, expiration date and the risk-free interest rate. The formula to calculate the price … [Read more...] about Black Scholes Model
SEBI Guidelines on Employee Stock Option Scheme
Definition: The Employee stock option scheme or ESOs is the form of executive compensation, wherein the selected executives are given a certain number of shares of the firm. Here, the employees have the right, but not the obligation to buy or sell the company’s shares at a specific date and at a specific time. The companies listed on the securities exchange must comply with … [Read more...] about SEBI Guidelines on Employee Stock Option Scheme
Hybrid Financing
Definition: Hybrid Financing is the financial instrument that partakes some characteristics of debt and some characteristics of equity. Simply, it is the financial security that possesses the characteristics of both the debt and equity. The debt and equity are the two extreme points and in the midpoint lies the hybrid financing that offers the investors the benefits of both … [Read more...] about Hybrid Financing
Convertible Debentures
Definition: The Convertible Debentures are a type of loan that can be converted into the stock of the company after a stipulated time period at the option of the holder or the issuer in special circumstances. These are issued with the intent to raise money to expand or maintain the business operations at a considerable low-interest rate. The debentures are the long-term debt … [Read more...] about Convertible Debentures
Stock Warrants
Definition: The Stock Warrants are like the options that give the holder the right, but not the obligation to buy or sell the security at a specific time and a specific date. Unlike options, these are issued by the company itself and are traded more over the counter than on an exchange. The stock warrants are issued to “sweeten the debt issues”, as with the purchase or sale … [Read more...] about Stock Warrants
Employee Stock Options
Definition: The Employee Stock Options or ESOs is the compensation scheme, wherein the specified employees or executives are granted a certain number of shares of the company. Here, the employee has the right, but not the obligation to buy the company’s shares at a specific time and a specific date. SEBI has issued certain guidelines that the companies listed on a recognized … [Read more...] about Employee Stock Options
Stock Option
Definition: The Stock Option is a security that gives the right to its holder, but not the obligation to buy or sell the outstanding stocks at a specific price and a specific date. The stock options are traded on the securities exchange like other shares. People purchase these stock options if they believe that the stock price is likely to go up or down in the near future. … [Read more...] about Stock Option
Monetised Deficit
Definition: The Monetised Deficit is the extent to which the RBI helps the central government in its borrowing programme. In other words, monetised deficit means the increase in the net RBI credit to the central government, such that the monetary needs of the government could be met easily. The monetized deficit results in the increase in the net holdings of treasury bills … [Read more...] about Monetised Deficit
Primary Deficit
Definition: The Primary Deficit is the difference between the fiscal deficit of current year and the interest paid on the previous borrowings. Thus, primary deficits are government’s borrowings exclusive of interest payment. Generally, the loan raised by the government is inclusive of the interest amount, and if that amount is deducted from the principal loan amount, the … [Read more...] about Primary Deficit
Fiscal Deficit
Definition: Fiscal Deficit refers to the financial situation wherein the government’s total budget exceeds the total receipts excluding borrowings made during the fiscal year. Thus, it can be expressed as: Fiscal Deficit = Total Expenditure – Total Receipts Excluding Borrowings Through Fiscal deficit, the government can determine the amount that needs to be borrowed in … [Read more...] about Fiscal Deficit