Definition: The External Commercial Borrowings or ECBs is the financial instrument used to borrow money from the foreign sources of financing to invest in the commercial activities of the domestic country. Simply, borrowing money from the non-resident lenders and investing it in the commercial activities of India is called as external commercial borrowings. The external … [Read more...] about External Commercial Borrowings
Seed Capital
Definition: The Seed Capital is the initial money required to start a new business. Simply, the initial funding required to start the operations of a new business is termed as a seed capital. Generally, the initial capital comes from the company’s founder personal assets or from friends, family or angel investors (the wealthy individuals who provide capital with some … [Read more...] about Seed Capital
Greenshoe Option
Definition: The Greenshoe Option is a special provision in the underwriting agreement that allows the underwriter to sell more shares to the investors, than what has been planned by the issuer in the initial public offerings (IPOs). In other words, Greenshoe option allows the underwriters or the syndicates (investment banks or brokerage agencies) to buy up to an additional … [Read more...] about Greenshoe Option
Insider Trading
Definition: The Insider Trading means, buying and selling off public company’s stock shares by a person who have an access to the material non-public information. The insider trading might be legal or illegal depending on the trading being done as a result of publicly disclosed information or on the basis of non-disclosure of material information to the public. In insider … [Read more...] about Insider Trading
Moratorium Period
Definition: The Moratorium Period is the time during the loan term in which the borrower in not required to repay the loan. It is the relaxation time given to the borrowers before beginning with the loan repayment in the form of EMIs. The education loan is a very good example that features the moratorium period scheme, where the loan repayment begins after the student … [Read more...] about Moratorium Period
Balloon Payment
Definition: The Balloon payment is the final amount paid against the loan and is much higher than the regular monthly installments. Simply, the lump sum amount attached to a loan which has to be paid (generally at the end of the loan period) to extinguish the loan is called as a balloon payment. The need for a balloon payment may arise due to the inadequacy of the previous … [Read more...] about Balloon Payment
Foreign Draft
Definition: The Foreign Draft is a type of bank draft, which is used to send money to the foreign countries. The foreign draft can be purchased from the commercial banks, which is prepared in the local currency and then is forwarded to the intended institution in any country, where the currency is converted on the basis of the current exchange rate. The individual or a firm … [Read more...] about Foreign Draft
Leveraged Buyout
Definition: Leveraged Buyout or LBO is the transaction wherein the acquisition of another company or a single asset is financed through the combination of equity and the significant amount of debt or borrowed funds. In other words, Leveraged buyout is the acquisition of another company by using the debt as the major or primary source of financing. Usually, the ratio used in … [Read more...] about Leveraged Buyout
Closed-End Fund
Definition: The Closed-End Fund or CEFs is essentially the publicly traded investment company that issue the fixed number of shares through the initial public offerings (IPO). In other words, the investment companies that raise their fixed amount of capital by trading their shares on an exchange, just like stock, is called as a closed-end fund. The unit capital of a … [Read more...] about Closed-End Fund
Open-End Fund
Definition: The Open-End Fund is the type of mutual fund, that has no restriction on the number of units the fund issues. In other words, an investor can issue and redeem its shares continuously, as there is no limit on the number of units the open-end fund will issue. The Open-End Fund is convenient for the investors since it issues as many shares as required by them and … [Read more...] about Open-End Fund