title should be

"basic economic terms and queries"

abhi.kamble Says

I think the title of the thread should be changed. The thread is nice with a good participation happening but the title is misleading. Mods please change it to Finance: Queries on basic concepts and terminologies.

Are yar, its not about finance only we are covering all about Economy. So rename accordingly.

I think the title of the thread should be changed. The thread is nice with a good participation happening but the title is misleading. Mods please change it to Finance: Queries on basic concepts and terminologies.

rkpandey Says

puys..............how over valuation of once country's currency harms its exporters?

Good question...
Lets say the value of Indian rupee is 45 rupees for 1 USD.
Now if the currency is over valued, than say its around 40 or 39 rupees for 1 USD.

Now because our currency has become expensive the exprters suffer.. How?
Say a company is making a product which cost the company 35 rupees. Now they sell it in the international market at 1 $.(or say the value of 1 unit product in international market is 1 $)

So the exporter makes 10 rupees out of 1 unit. okay.
Now say our currency has come to 39 rupees a $ than the exporters make only 4 rupees from 1 unit.
And as you know increasing price will always give benefit to your competitiors. so no price increase :-P

puys..............how over valuation of once country's currency harms its exporters?

worth a read..
an article by amartya sen :

The Hindu : Opinion / Op-Ed : Growth and other concerns

Nice one :-P

I believe the name of the thread i.e., ECONOMIC TIMES EDITORIAL is not apt .

Well here goes an article from The ECONOMIST about the impact of political risks on current Globalised Business Arena
Schumpeter: Beyond economics | The Economist

worth a read..
an article by amartya sen :

The Hindu : Opinion / Op-Ed : Growth and other concerns

kopal khare. Says

could anybody explain me what Credit Crunch exactly means? with satisfactory examples...

credit crunch actually refers to the suddent reduction/ non availability of loans or say money in the market.

ab issme kya example du yaar..

could anybody explain me what Credit Crunch exactly means? with satisfactory examples...

Very good going!!:cheerio: Really enjoying this thread..& got answers of some ques which I stumbled before & kept hanging to ask proper person!

have a question!
I used to read in some articles RBI has increased 25 basis(not sure basic or basis) point!! what does it mean??

Itss Basis point.
Base point is a unit which is used for interest rates and its 1/100 th of 1 percent.
So 25 basis point means 0.25% .

This thread has suddenly attracted more puys.. Enjoying the discussion.. Love to discuss about markets..

Very good going!!:cheerio: Really enjoying this thread..& got answers of some ques which I stumbled before & kept hanging to ask proper person!

have a question!
I used to read in some articles RBI has increased 25 basis(not sure basic or basis) point!! what does it mean??

abhij1306 Says

What is this 100cr in financial terms and how often are the ratios calculated (as a bank's total assets will keep on varying daily)?

After brief searching. They're calculated on fortnight basis.

SLR is calculated on a scheduled bank's total demand and time liabilities in India as on the last Friday of the second preceding fortnight as the Reserve Bank may, by notification in the Official Gazette, specify from time to time.

CRR
all Scheduled Commercial Banks are required to maintain minimum CRR balances up to 70 per cent of the average daily required reserves for a reporting fortnight .

I think bank have to put the money with RBI out of the Deposits only. The other assets are called investment of the bank which is made after putting aside the Cash as per CRR ratio with RBI.
Correct me if I am wrong.

CRR is calculated as % of a bank's total of demand and time liabilities.
Other Demand and Time Liabilities (ODTL) which are not in the nature of deposits or borrowing, have to be shown in the report.
Average CRR is required to be maintained on that too, by all Scheduled Commercial Banks.

More goes here
Reserve Bank of India

CRR= cash reserve ratio,
You're a banker, you've to keep deposit that much ca$h in RBI.

SLR = Statutory liquidity ratio
You've to keep that much gold/ca$h/bonds in your bank.

Lets say you're a banker, have 100 cr.Rs.
Out of that you were required to keep aside 1 cr. worth cash,gold etc. in SLR+CRR in Jan'11 as per RBI order.

So you've 99 cr. to give as loan and earn interest out of it.

But in Feb'11, RBI increases both ratios, so you've to keep aside 5 cr. in SLR+CRR.
So you only have 95 cr. to give as loan and earn interest out of it.

How does this affect economy?
Well Lower SLR+CRR, means bank can give more money as loan = lower interest rates = cheap loan = more people take loan to start business or building house or buying car = boost in economy
HOWEVER, can also lead to inflation, if people have more $$ in their hands than the items available for purchase in the market.

Higher SLR+CRR = bank can give less money as loan = HIGHER interest rate = it becomes expensive to start a new factory, buy a new house / car/bike.

I think bank have to put the money with RBI out of the Deposits only. The other assets are called investment of the bank which is made after putting aside the Cash as per CRR ratio with RBI.

Correct me if I am wrong.

abhij1306 Says

What is this 100cr in financial terms and how often are the ratios calculated (as a bank's total assets will keep on varying daily)?

Sorry no idea, I only tried to give a layman friendly explanation for SLR,CRR's impact on economy.

abhij1306 Says

What is this 100cr in financial terms and how often are the ratios calculated (as a bank's total assets will keep on varying daily)?

Sorry no idea, I only tried to give a layman friendly explanation.

CRR= cash reserve ratio,
You're a banker, you've to keep deposit that much ca$h in RBI.

SLR = Statutory liquidity ratio
You've to keep that much gold/ca$h/bonds in your bank.

Lets say you're a banker, have 100 cr.Rs.
Out of that you were required to keep aside 1 cr. worth cash,gold etc. in SLR+CRR in Jan'11 as per RBI order.

So you've 99 cr. to give as loan and earn interest out of it.

But in Feb'11, RBI increases both ratios, so you've to keep aside 5 cr. in SLR+CRR.
So you only have 95 cr. to give as loan and earn interest out of it.

How does this affect economy?
Well Lower SLR+CRR, means bank can give more money as loan = lower interest rates = cheap loan = more people take loan to start business or building house or buying car = boost in economy
HOWEVER, can also lead to inflation, if people have more $$ in their hands than the items available for purchase in the market.

Higher SLR+CRR = bank can give less money as loan = HIGHER interest rate = it becomes expensive to start a new factory, buy a new house / car/bike.

What is this 100cr in financial terms and how often are the ratios calculated (as a bank's total assets will keep on varying daily)?

abhij1306 Says

How do changes in CRR and SLR affect the economy?

CRR= cash reserve ratio,
You're a banker, you've to keep deposit that much ca$h in RBI.

SLR = Statutory liquidity ratio
You've to keep that much gold/ca$h/bonds in your bank.

Lets say you're a banker, have 100 cr.Rs.
Out of that you were required to keep aside 1 cr. worth cash,gold etc. in SLR+CRR in Jan'11 as per RBI order.

So you've 99 cr. to give as loan and earn interest out of it.

But in Feb'11, RBI increases both ratios, so you've to keep aside 5 cr. in SLR+CRR.
So you only have 95 cr. to give as loan and earn interest out of it.

How does this affect economy?
Well Lower SLR+CRR, means bank can give more money as loan = lower interest rates = cheap loan = more people take loan to start business or building house or buying car = boost in economy
HOWEVER, can also lead to inflation, if people have more $$ in their hands than the items available for purchase in the market.

Higher SLR+CRR = bank can give less money as loan = HIGHER interest rate = it becomes expensive to start a new factory, buy a new house / car/bike.

I think I get the basic idea but I have many more questions now
1.How are OTC options valued?
2.How is the pricing done (scarface mentioned some models)

And since exchange traded options work in refernce to the stock prices (strike price), it should be logical to trade in options when the market is volatile ?( I am just assuming. Please correct me if I am wrong )

they have their own committee.. read here BSEIndia
cheers!
atb for nm ;)

yes I have read that, and you told that S&P; has a role than tried for NSE. So found that NIFTY is determined by S&P; but as I had read about this BSE I got confused. :lookround:

Thanks for wishes..

I know they are determined by RBI but what is the formula used and are there any ceilings on these ratios?

Can you please elaborate futures and options with the help of an example.

I would love to elaborate on Options.

See option gives a right to buy or sell the underlying security but NOT OBLIGATION.
The word obligation plays an imp role.

Let say I have a car which is worth 10 lac rupees at this point of time.
Now You want to buy that car but right now you dont have entire sum of 10 lac on your hand. but you want to buy it within 2 month.

So we negotiate a deal that I will sell you this car at 10 lac within 2 months.
But to have that right you have to give me 30000 rupees.(Mind it, its not advance, you have to still give me 10 lac within two month to buy that car)

Now there are two situations,
1. Now after deal say some info comes out because of which the price of the car goes up.( assume it, I know car prices dont go up :-P)
And it becomes worth 15 lac. Than you have the right to buy this car at 10 lac and so you make 15 lac - 10 lac - 30000 rupees out of this deal.(I cannot break the contract as I have given you rights to buy it for 10 lac within 2 months)

2, Say the car price go down drastically coz you find some problem with car. And say it stands at the price of 5 lac. Than you have an option to not buy this car. Though if you dont buy it you will loose your 30000.

In terms of stock this 30000 rupeees is called premium you pay to buy the right to buy or sell at specific price.

Hope this will clear your doubts.
Anything else you want to know, you are welcome. Stock market is my love.

PS: I have taken help of Investopedia for example..

I know they are determined by RBI but what is the formula used and are there any ceilings on these ratios?

Can you please elaborate futures and options with the help of an example.

no idea if they have any formula as such. it is mostly a macro economic decision they take.

for futures,options please google ,investopedia it out,very basic fundas and easy to understand. let me kno if it is not clear after researching.
cheers!

khanjan Says

For S&P; NIFTY yup. you are right but I still have confusion regarding SENSEX. I tried googling but could not find any specific info.. Though I am trading stock market since last 4 years, not sure about this thing :-P

they have their own committee.. read here BSEIndia
cheers!
atb for nm

futures,options are contracts which enable you to buy,sell anything after sometime.futures have no down payment and money exchange takes place only on expiry of contract.option involves premium- down-payment which ensures that the one who has made the payment has an Option to execute the contract as per his will.
cash reserve ratio is minimum cash required to be maintained and statutory liquidity ratio is the minimum liquid assets to maintain( gold,cash,money market instruments).
if crr,slr is decreased by RBI for banks, same will be done by banks for retail,corporate clients. thereby decrease causes more money in market,increase sucks out liquidity from the hands of these banks.



if i am not wrong third party firms like SnP etc maintain these indices.maintenance involves determining the most significant 50,30 stocks.

For S&P; NIFTY yup. you are right but I still have confusion regarding SENSEX. I tried googling but could not find any specific info.. Though I am trading stock market since last 4 years, not sure about this thing :-P

yes, down-payment is the only difference. it enables you to have an option t
o execute the contract. this causes the payoff graphs to be different as well. this makes option pricing difficult since in case of american options, they can executed prior to maturity and hence you need to use concepts like Geometric brownian motion,taylor series for the valuation.(Black scholes merton model)

futures are generally valued using the exponential function

ratios are determined by the RBI and are mandatory to be followed by the banks.
limits??

I know they are determined by RBI but what is the formula used and are there any ceilings on these ratios?

Can you please elaborate futures and options with the help of an example.

1.Is down-payment the only difference between options and futures?
2.How are these ratios determined? What are the limits?

yes, down-payment is the only difference. it enables you to have an option t
o execute the contract. this causes the payoff graphs to be different as well. this makes option pricing difficult since in case of american options, they can executed prior to maturity and hence you need to use concepts like Geometric brownian motion,taylor series for the valuation.(Black scholes merton model)

futures are generally valued using the exponential function

ratios are determined by the RBI and are mandatory to be followed by the banks.
limits??

futures,options are contracts which enable you to buy,sell anything after sometime.futures have no down payment and money exchange takes place only on expiry of contract.option involves premium- down-payment which ensures that the one who has made the payment has an Option to execute the contract as per his will.
cash reserve ratio is minimum cash required to be maintained and statutory liquidity ratio is the minimum liquid assets to maintain( gold,cash,money market instruments).
if crr,slr is decreased by RBI for banks, same will be done by banks for retail,corporate clients. thereby decrease causes more money in market,increase sucks out liquidity from the hands of these banks.

1.Is down-payment the only difference between options and futures?
2.How are these ratios determined? What are the limits?

1.What are "futures" and "options" in stock market?
2.How do changes in CRR and SLR affect the economy?

futures,options are contracts which enable you to buy,sell anything after sometime.futures have no down payment and money exchange takes place only on expiry of contract.option involves premium- down-payment which ensures that the one who has made the payment has an Option to execute the contract as per his will.
cash reserve ratio is minimum cash required to be maintained and statutory liquidity ratio is the minimum liquid assets to maintain( gold,cash,money market instruments).
if crr,slr is decreased by RBI for banks, same will be done by banks for retail,corporate clients. thereby decrease causes more money in market,increase sucks out liquidity from the hands of these banks.

Buddy,
SEBI donot decide the companies in the SENSEX or NIFTY. Its the respective authority from the Stock Exchange who decides this.

SEBI is a market watch dog. It has to watch that the companies do not exploit their power and make any loss to the retail investor. eg Insider trading.
Recently they have notified Anil Ambani group for insider trading.

if i am not wrong third party firms like SnP etc maintain these indices.maintenance involves determining the most significant 50,30 stocks.

Ans1)yes dere can be companies dat feature in both NIFTY and SENSEX
Ans2)yes SEBI decided the list of 30 companies

Buddy,
SEBI donot decide the companies in the SENSEX or NIFTY. Its the respective authority from the Stock Exchange who decides this.

SEBI is a market watch dog. It has to watch that the companies do not exploit their power and make any loss to the retail investor. eg Insider trading.
Recently they have notified Anil Ambani group for insider trading.

1.What are "futures" and "options" in stock market?
2.How do changes in CRR and SLR affect the economy?

catophile Says

how is sensex and nifty calculated?

for sensex...
Sensex Calculation Methodology :

Sensex is calculated using the "Free-float Market Capitalization" methodology. As per this methodology, the level of index at any point of time reflects the Free-float market value of 30 component stocks relative to a base period. The market capitalization of a company is determined by multiplying the price of its stock by the number of shares issued by the company. This market capitalization is further multiplied by the free-float factor to determine the free-float marketcapitalization.
The base period of Sensex is 1978-79 and the base value is 100 index points. This is often indicated by the notation 1978-79=100. The calculation of Sensex involves dividing the Free-float market capitalization of 30 companies in the Index by a number called the Index Divisor.
The Divisor is the only link to the original base period value of the Sensex. It keeps the Index comparable over time and is the adjustment point for all Index adjustments arising out of corporate actions, replacement of scrips etc. During market hours, prices of the index scrips, at which latest trades are executed, are used by the trading system to calculate Sensex every 15 seconds and disseminated in real time

Understanding Free-float Methodology

Free-float Methodology refers to an index construction methodology that takes into consideration only the free-float market capitalisation of a company for the purpose of index calculation and assigning weight to stocks in Index. Free-float market capitalization is defined as that proportion of total shares issued by the company that are readily available for trading in the market.
It generally excludes promoters' holding, government holding, strategic holding and other locked-in shares that will not come to the market for trading in the normal course. In other words, the market capitalization of each company in a Free-float index is reduced to the extent of its readily available shares in the market.
In India, BSE pioneered the concept of Free-float by launching BSE TECk in July 2001 and Bankex in June 2003. While BSE TECk Index is a TMT benchmark, Bankex is positioned as a benchmark for the banking sector stocks. Sensex becomes the third index in India to be based on the globally accepted Free-float Methodology.

Example :
Suppose the Index consists of only 2 stocks: Stock A and Stock B.
Suppose company A has 1,000 shares in total, of which 200 are held by the promoters, so that only 800 shares are available for trading to the general public. These 800 shares are the so-called 'free-floating' shares.
Similarly, company B has 2,000 shares in total, of which 1,000 are held by the promoters and the rest 1,000 are free-floating.
Now suppose the current market price of stock A is Rs 120. Thus, the 'total' market capitalisation of company A is Rs 120,000 (1,000 x 120), but its free-float market capitalisation is Rs 96,000 (800 x 120).
Similarly, suppose the current market price of stock B is Rs 200. The total market capitalisation of company B will thus be Rs 400,000 (2,000 x 200), but its free-float market cap is only Rs 200,000 (1,000 x 200).
So as of today the market capitalisation of the index (i.e. stocks A and B) is Rs 520,000 (Rs 120,000 + Rs 400,000); while the free-float market capitalisation of the index is Rs 296,000. (Rs 96,000 + Rs 200,000).
The year 1978-79 is considered the base year of the index with a value set to 100. What this means is that suppose at that time the market capitalisation of the stocks that comprised the index then was, say, 60,000 (remember at that time there may have been some other stocks in the index, not A and B, but that does not matter), then we assume that an index market cap of 60,000 is equal to an index-value of 100.
Thus the value of the index today is = 296,000 x 100/60,000 = 493.33
This is how the Sensex is calculated. The factor 100/60000 is called index divisor.
hope it helps..

kopal khare. Says

ahem... iam not a BRO.. iam a female...!!!!! :nono:

To ALL, Please use the thanks button to keep the thread limited to relevant stuff.

spectramind07 Says

@Kopal-thnxx a ton bro!!!

ahem... iam not a BRO.. iam a female...!!!!!

how is sensex and nifty calculated?

here it goes...


Repo (Repurchase) Rate:

Repo rate is the rate at which banks borrow funds from the RBI to meet the gap between the demand they are facing for money (loans) and how much they have on hand to lend. If the RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate; similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rate.

Reverse Repo Rate:
This is the exact opposite of repo rate. The rate at which RBI borrows money from the banks (or banks lend money to the RBI) is termed the reverse repo rate. The RBI uses this tool when it feels there is too much money floating in the banking systemIf the reverse repo rate is increased, it means the RBI will borrow money from the bank and offer them a lucrative rate of interest. As a result, banks would prefer to keep their money with the RBI (which is absolutely risk free) instead of lending it out (this option comes with a certain amount of risk)Consequently, banks would have lesser funds to lend to their customers. This helps stem the flow of excess money into the economy

Reverse repo rate signifies the rate at which the central bank absorbs liquidity from the banks, while repo signifies the rate at which liquidity is injected.

hope it helps....:grin:

it surely did help

@Kopal-thnxx a ton bro!!!

spectramind07 Says

Can someone explain in layman terms....what is REPO RATE and REVERSE REPO RATE???

here it goes...


Repo (Repurchase) Rate:

Repo rate is the rate at which banks borrow funds from the RBI to meet the gap between the demand they are facing for money (loans) and how much they have on hand to lend. If the RBI wants to make it more expensive for the banks to borrow money, it increases the repo rate; similarly, if it wants to make it cheaper for banks to borrow money, it reduces the repo rate.

Reverse Repo Rate:
This is the exact opposite of repo rate. The rate at which RBI borrows money from the banks (or banks lend money to the RBI) is termed the reverse repo rate. The RBI uses this tool when it feels there is too much money floating in the banking systemIf the reverse repo rate is increased, it means the RBI will borrow money from the bank and offer them a lucrative rate of interest. As a result, banks would prefer to keep their money with the RBI (which is absolutely risk free) instead of lending it out (this option comes with a certain amount of risk)Consequently, banks would have lesser funds to lend to their customers. This helps stem the flow of excess money into the economy

Reverse repo rate signifies the rate at which the central bank absorbs liquidity from the banks, while repo signifies the rate at which liquidity is injected.

hope it helps....:grin:

Can someone explain in layman terms....what is REPO RATE and REVERSE REPO RATE???

Can u answer me a few ques?
1.are these 30 companies included in 50 companies of NIFTY!!
2.Who decides the list of 30 companis? SEBI?

Ans1)yes dere can be companies dat feature in both NIFTY and SENSEX
Ans2)yes SEBI decided the list of 30 companies

SENSEX can be rightly termed as the barometer of BSE.SENSEX consists of 30 largest and most actively traded stocks on the BSE.Following are the companies that are enlisted in SENSEX-

1)Bajaj Auto Limited,
2)Bharti Airtel Ltd.,
3)Bharat Heavy Electricals Ltd.,
4)Cipla Ltd.,
5)DLF Ltd.,
6)HDFC,
7)HDFC Bank Ltd.,
Hero Honda Motors Ltd.,
9)Hindalco Industries Ltd.,
10)Hindustan Unilever Ltd.,
11)ICICI Bank Ltd.,
12)Infosys Technologies Ltd.,
13)ITC Ltd.,
14)Jaiprakash Associates Ltd.,
15)Jindal Steel & Power Ltd.,
16)Larsen & Toubro Ltd.,
17)Mahindra & Mahindra Ltd.,
1Maruti Suzuki India Ltd.,
19)NTPC Ltd.,
20)ONGC Ltd.,
21)Reliance Industries Ltd.,
22)Reliance Communications Ltd.,
23)Reliance Infrastructure Ltd.,
24)State Bank of India,
25)Sterlite Industries (India) Ltd.,
26)Tata Motors Ltd.,
27)Tata Power Company Ltd.,
2Tata Steel Ltd.,
29)Tata Consultancy Services Ltd.,
30)Wipro Ltd.

But the above list keeps on changing,some new companies replace older ones(e.g DLF replaced Dr.Reddy's Labs in 2007) the list is updated regularly as to reflect current market trends

Can u answer me a few ques?
1.are these 30 companies included in 50 companies of NIFTY!!
2.Who decides the list of 30 companis? SEBI?

Thanks for the reply!! Very good effort puys!!

prash9 Says

which companies make the sensex ? how and why do they change ?

SENSEX can be rightly termed as the barometer of BSE.SENSEX consists of 30 largest and most actively traded stocks on the BSE.Following are the companies that are enlisted in SENSEX-

1)Bajaj Auto Limited,
2)Bharti Airtel Ltd.,
3)Bharat Heavy Electricals Ltd.,
4)Cipla Ltd.,
5)DLF Ltd.,
6)HDFC,
7)HDFC Bank Ltd.,
Hero Honda Motors Ltd.,
9)Hindalco Industries Ltd.,
10)Hindustan Unilever Ltd.,
11)ICICI Bank Ltd.,
12)Infosys Technologies Ltd.,
13)ITC Ltd.,
14)Jaiprakash Associates Ltd.,
15)Jindal Steel & Power Ltd.,
16)Larsen & Toubro Ltd.,
17)Mahindra & Mahindra Ltd.,
1Maruti Suzuki India Ltd.,
19)NTPC Ltd.,
20)ONGC Ltd.,
21)Reliance Industries Ltd.,
22)Reliance Communications Ltd.,
23)Reliance Infrastructure Ltd.,
24)State Bank of India,
25)Sterlite Industries (India) Ltd.,
26)Tata Motors Ltd.,
27)Tata Power Company Ltd.,
2Tata Steel Ltd.,
29)Tata Consultancy Services Ltd.,
30)Wipro Ltd.

But the above list keeps on changing,some new companies replace older ones(e.g DLF replaced Dr.Reddy's Labs in 2007) the list is updated regularly as to reflect current market trends

which companies make the sensex ? how and why do they change ?

A simple definition of a share would be the dictionary definition of the word itself!

What do you mean by a share of something? some part of the whole right? Similarly a share is nothing but a part ownership of the company. The entire capital of the company is divided into a number of units and each unit is called a share. For example, if the capital of a company is INR 100 and it is divided into 100 units, then each unit is a share and is worth 1 Rupee on paper (which is called its face value or par value).

A share can be allotted in different ways. The basic concept is that you pay some money and get a share of the company in return.

You can apply for shares when private companies decide to go public. These are called "IPOs"(Initial Public Offering - the first time a private company issues shares to people other than its private owners). Depending on the demand and supply of shares, you will be allotted a certain number of shares.

You can then trade these on the share markets (which are called the secondary markets)

that makes things very clear
thanks

sanchitconfused Says

what is a share and how it is allotted?????/

A simple definition of a share would be the dictionary definition of the word itself!

What do you mean by a share of something? some part of the whole right? Similarly a share is nothing but a part ownership of the company. The entire capital of the company is divided into a number of units and each unit is called a share. For example, if the capital of a company is INR 100 and it is divided into 100 units, then each unit is a share and is worth 1 Rupee on paper (which is called its face value or par value).

A share can be allotted in different ways. The basic concept is that you pay some money and get a share of the company in return.

You can apply for shares when private companies decide to go public. These are called "IPOs"(Initial Public Offering - the first time a private company issues shares to people other than its private owners). Depending on the demand and supply of shares, you will be allotted a certain number of shares.

You can then trade these on the share markets (which are called the secondary markets)

what is a share and how it is allotted?????/

In broad sense, "liquidation" would simply mean the shutting down of a company.

It could also mean something little different from this, depending on the context it is used in. But the basic sense is that the capital of the company is reduced. Simply "liquidation" of a company would mean that it is reduced to zero and hence the company ceases to exist henceforth.

It can also be used in the case of loans and assets , where it would still mean the same in the broad sense. However there might be a small difference in the way you perceive it. Take examples:

Liquidation of a loan - means the repayment of a loan - and hence the loan ceases to exist any longer.

Liquidation of an asset - means selling off that asses - and hence that asset ceases to belong to that organization any longer.

There could also be cases of partial liquidation where the liquidation is not complete i.e., it does not bring down the entity under discussion to zero, but still reduces it to an extent.

If you could provide more context, maybe a better explanation could be offered.

thanx for the answer

spectramind07 Says

does anybody know what exactly is liquidation???

In broad sense, "liquidation" would simply mean the shutting down of a company.

It could also mean something little different from this, depending on the context it is used in. But the basic sense is that the capital of the company is reduced. Simply "liquidation" of a company would mean that it is reduced to zero and hence the company ceases to exist henceforth.

It can also be used in the case of loans and assets , where it would still mean the same in the broad sense. However there might be a small difference in the way you perceive it. Take examples:

Liquidation of a loan - means the repayment of a loan - and hence the loan ceases to exist any longer.

Liquidation of an asset - means selling off that asses - and hence that asset ceases to belong to that organization any longer.

There could also be cases of partial liquidation where the liquidation is not complete i.e., it does not bring down the entity under discussion to zero, but still reduces it to an extent.

If you could provide more context, maybe a better explanation could be offered.

does anybody know what exactly is liquidation???

1)NSE(National Stock Exchange) is India's biggest stock exchange(also World's 10th largest,in terms of market capitalisation).NSE is mutually-owned by a set of leading financial institutions, banks, insurance companies and other financial intermediaries in India but its ownership and management operate as separate entities

2)BSE(Bombay Stock Exchange)is the Asia's oldest stock exchange.It is located in Dalaal Street,Mumbai.BSE has largest number of listed companies in da world(more than 5034).

3)NIFTY(NSE's Fifty) is an index computed from top stocks from the various sectors listed on NSE.NIFTY consists of 50 companies from 24 diverse sectors.these 50 campanies may vary from time to time dependind on various factors.

4)SENSEX-It is BSE's SENSitive indEX.it is the benchmark index for BSE.SENSEX consists of 30 top and actively traded stocks in BSE

as far as i know..NSE was first a tax paying company in 1992 and then was recognised as a stock exchange.Stock exchange is a place where stock or share transactions take place.There are 50 major companies listed under NSE and the index for NSE is S&P; CNXC NIFTY also known as the NSE NIFTY, an index of 50 major stocks.

BSE is also a stock exchange which has 30 major companies listed under it..There are many other stock exchanges but these two are the major players in the INDIAN economy.

hmmmmmmm
good easy answer

i am also looking for a simple answer
which even a layman can understand

as far as i know..NSE was first a tax paying company in 1992 and then was recognised as a stock exchange.Stock exchange is a place where stock or share transactions take place.There are 50 major companies listed under NSE and the index for NSE is S&P; CNXC NIFTY also known as the NSE NIFTY, an index of 50 major stocks.

BSE is also a stock exchange which has 30 major companies listed under it..There are many other stock exchanges but these two are the major players in the INDIAN economy.

guys pls i want your support pls read this link and comment after that please post you comment please B-schools may approach Supreme Court against AICTE notification rkpushkar: MISSION IIMA2011

i am also looking for a simple answer
which even a layman can understand

olrite..i guess i will have to take the initiative now..lets discuss something about the stock market and terms related to it..does somebody know what exactly is NSE and BSE and what is NIFTY..may be i am too dumb to ask dis..:lookround:

i am rajneesh pushker i want a bit help from you guys please i write a blog everyday i update some question . about something and book review in my own language so that i can improve my english so pls if you have time pls give a look on my blog try to post my mistake and how i improve this . you also post your point of view your comment always welcome rkpushkar: MISSION IIMA2011
thanks in advance

a nice initiative..even i am a novice and totally clueless of the economics.. infact the word "economics" doesnt give me a good feeling.. but i am looking forward for a healthy participation here and will try my best to contribute in it..

cmon puys i want this thread to continue

no one posting ehhhhhhhhh???????????????

and yes this thread is a nice initiative

rkpushkar Says

i want to ask a question from you puys why any country give fund to other country for their development what is the definite of this thing to the country for example indian president visit some other country and givie 200 crore for developing the health services then what is the benefit from this to INDIA

first of all
it would strengthen ties between both the countries ,not only on economic terms but also on cultural and emotional front
secondly it also helps to better the health system , an aid for health is afterall an aid
thirdly,the aid receiving country would also be willing to help us in trouble
next ,it helps in branding the image of the country
lastly,it's politics it may win us some favours on international fronts like
say if india wants to pass a bill in un then that country would be more willing to support us
hope it's clear