Recap Daily Points – March, 2025

 

                               The Banking Tutor                                    

Recap Daily Points  – March, 2025

 

1994. Information Ratio (IR)

Information Ratio (IR) is a financial ratio to measure the Risk Adjusted Return (RAR) of any scheme portfolio. It is often used as a measure of a portfolio manager’s level of skill and ability to generate excess returns, relative to a benchmark and also attempts to identify the consistency of the performance by incorporating standard deviation/risk factor into the calculation.

IR is calculated as: (Portfolio Rate of Returns - Benchmark Rate of Returns)/Standard Deviation of Excess Return.

 

1995. Inflation Swap

An inflation swap is a contract used to transfer inflation risk from one party to another through an exchange of fixed cash flows.

 

1996. Application Tracking System (ATS)

The ATS is an Application Tracking System, hosted on the public website of the Reserve Bank of India (RBI), which has been developed for members of the public to submit any individual application to RBI and keep track of the status of its disposal thereafter.

 

1997. Reverse Triangular Merger

A reverse triangular merger is the formation of a new company that occurs when an acquiring company creates a subsidiary, the subsidiary purchases the target company, and the subsidiary is then absorbed by the target company. 

 

1998. Index of Industrial Production (IIP)

Index of Industrial Production (IIP) is one of the prime indicators of the economic development for the measurement of trend in the behaviour of the Industrial Production over a period of time, with reference to a chosen base year. It indicates the changes in the volume of production of a basket of industrial products during a given period with respect to that in a chosen base period.

 

1999. Lifestyle Creep

Lifestyle creep is when your standard of living rises alongside your discretionary income—and soon enough, former luxuries become new necessities. It happens little by little, without you really realizing it: it sneaks ("creeps") up on you.

 

2000. Invisible Hand

The unobservable market force that helps the demand and supply of goods in a free market to reach equilibrium automatically is the invisible hand. The phrase invisible hand was introduced by Adam Smith in his book 'The Wealth of Nations'. He assumed that an economy can work well in a free market scenario where everyone will work for his/her own interest.

 

2001. Pip

Generally the lowest and smaller increment in which a currency pair is priced. Pips are used to measure movement in a forex pair. Pips prices are subject to change and can be moved due to the timing of the trade and the amount that is being traded.

Typically, it refers to the last decimal or digit of the instrument price.

For example, the price of GBP/USD is 1.42630 / 1.42650 (Sell/Buy). If the price of GBP/USD moves to 1.42670 / 1.42690, this is a movement of 0.00040 or 40 pips. 

 

2002. Delivered Duty Unpaid (DDU)

Delivered Duty Unpaid (DDU) is an old international trade term indicating that the seller is responsible for the safe delivery of goods to a named destination. The seller pays all transportation expenses and assumes all risks during transport. Delivered Duty Unpaid (DDU) isn't included in the most recent 2023 edition of the International Chamber of Commerce's Incoterms. The official term that best describes the function of DDU is now "Delivered at-Place (DAP).

 

2003. Top-Down Investing

Top-down investing is an investment analysis approach that focuses on the macro factors of the economy, such as GDP, employment, taxation, interest rates, etc. before examining micro factors such as specific sectors or companies.

 

2004. Foreign Currency Convertible Bond (FCCB)

A foreign currency convertible bond (FCCB) is a type of convertible bond issued in a currency different than the issuer's domestic currency. In other words, the money being raised by the issuing company is in the form of foreign currency.

 

2005. Null Hypothesis

A null hypothesis is a type of statistical hypothesis that proposes that no statistical significance exists in a set of given observations.

Hypothesis testing is used to assess the credibility of a hypothesis by using sample data. Sometimes referred to simply as the “null,” it is represented as H0.

The null hypothesis, also known as “the conjecture,” is used in quantitative analysis to test theories about markets, investing strategies, and economies to decide if an idea is true or false. 

 

2006. Command Economy

A command economy is a key aspect of a political system in which a central governmental authority dictates the levels of production that are permissible and the prices that may be charged for goods and services. Most industries are publicly owned.

 

2007. Gap Insurance

Gap insurance is a type of auto insurance that you can purchase to protect yourself in case you total your car and the amount of compensation you receive does not fully cover the amount you owe on your financing or lease agreement. If the balance of your car loan is greater than the vehicle's book value, gap insurance can cover the difference.

 

2008. Channel Stuffing

Channel stuffing is a deceptive business practice used by a company to inflate its sales and earnings figures by deliberately sending retailers along its distribution channel more products than they are able to sell to the public.

 

2009. Due Date Rate

Due date rate is the amount of debt that has to be paid on a date decided in the past. It can also be known as maturity date rate. If the due date amount is higher than the actual amount, then it results in profit, otherwise it’s a loss.

 

2010. Pearson Coefficient

The Pearson coefficient is a type of correlation coefficient that represents the relationship between two variables that are measured on the same interval or ratio scale. The Pearson coefficient is a measure of the strength of the association between two continuous variables.

 

2011. Systemic Sampling

Systematic sampling is a probability sampling method in which sample members from a larger population are selected according to a random starting point but with a fixed, periodic interval. This sampling interval is calculated by dividing the population size by the desired sample size.

 

2012. ESG Investing

ESG stands for environmental, social, and governance. ESG investing refers to how companies score on these responsibility metrics and standards for potential investments. Environmental criteria gauge how a company safeguards the environment. Social criteria examine how it manages relationships with employees, suppliers, customers, and communities. Governance measures a company’s leadership, executive pay, audits, internal controls, and shareholder rights. ESG investing is sometimes referred to as sustainable investing, responsible investing, impact investing, or socially responsible investing (SRI).

 

2013. Enterprise Resource Planning (ERP)

Enterprise resource planning (ERP) is a platform companies use to manage and integrate the essential parts of their businesses. Many ERP software applications are critical to companies because they help them implement resource planning by integrating all the processes needed to run their companies with a single system.

 

2014. Cap and Trade

Cap and trade is a common term for a government regulatory program designed to limit, or cap, the total level of certain emissions as a result of industrial activity.

 

2015. Watchlist

A watchlist is a set of securities that an investor monitors for potential trading or investing opportunities.

2016. Liability-Driven Investment (LDI)

A liability-driven investment (LDI) is an investment in assets that can generate the cash to pay for financial obligations (liabilities).

 

2017. CANSLIM

CANSLIM is a system for selecting growth stocks by using a combination of fundamental and technical analysis techniques.

 

2018. Hedge

A hedge is an investment that is selected to reduce the potential for loss in other investments because its price tends to move in the opposite direction. This strategy works as a kind of insurance policy, offsetting any steep losses in other investments.

 

2019. Inflationary Risk

Inflationary risk is the risk that the future real value (after inflation) of an investment, asset, or income stream will be reduced by unanticipated inflation.

 

2020. Irrevocable Trust

The purpose of an irrevocable trust is to move the assets from the grantor's control and name to that of the beneficiary. This reduces the value of the grantor's estate in regard to estate taxes and protects the assets from creditors.

 

2021. Magnificent Seven

“Magnificent Seven” refer to a group of seven high-performing and influential stocks in the technology sector. 

 

2022. Windfall Tax

A windfall tax is a tax levied by governments against certain industries when economic conditions allow those industries to experience significantly above-average profits. Windfall taxes are primarily levied on companies in the targeted industry that have benefited the most from the economic windfall, most often commodity-based businesses.

 

2023. Equal Weight

Equal weight is a type of proportional measuring method that gives the same importance to each stock in a portfolio, index, or index fund.

 

2024. Cost-of-Living Adjustment (COLA)

A cost-of-living adjustment (COLA) is an increase made to Social Security benefits and Supplemental Security Income (SSI) to counteract the effects of inflation and rising prices in the economy.

TBT Team

01-04-2025                                                                                +91 94406 41014