common terms in finance

It refers to the percentage of the amount that banks have to keep with themselves in the form of :-

Bank rate, also referred to as the discount rate, is the rate of interest which a central bank charges on

That it extends to Commercial Banks and other Financial Intermediaries.

Repo rate is the rate at which commercial banks borrow rupees from RBI.

Ask price is a price a seller of a good is willing to accept for that particular good.

In the context of stock trading on a stock exchange, the ask price is the lowest price a

seller of a stock is willing to accept for a share of that given stock.

For mutual funds, the asking price is the net asset value plus any sales

charges.

Degree of Financial

Leverage=

Percentage Change in

EPS

Percentage Change in

EBIT

Firm’s ability to use Fixed Operating Cost to magnify the effect of changes in Sales on its Earnings Before

Interest and Tax

Degree of Operating Leverage = Percentage Change in EBIT

Percentage Change in Sales

An investment made in order to reduce the risk of adverse price movements in a security, by taking an offsetting position in a related security, such as an option

or a short sale.

A gain or loss in the cash position due to changes in price levels will be countered by changes in the value of a futures position.

The hedger tries to fix the price at a certain level with the

objective of ensuring certainty in the cost of production or

revenue of sale.