Nagasravan Tamma has Published 288 Answers

What is option contract?

Nagasravan Tamma

Nagasravan Tamma

Updated on 20-May-2022 06:55:27

Options contract is the contract between parties in which, a buyer has the right to sell or buy a particular asset at future date on agreed price. These types of contract are used in securities, commodities etc.In this, buyer will look at ask price and if he wants to buy ... Read More

What are swap curves?

Nagasravan Tamma

Nagasravan Tamma

Updated on 20-May-2022 06:51:46

Swap curve is the relationship between swap rates and varying maturities. This curve tells about the expected returns at different maturity dates. It is a two dimensional curve in which, Y-axis represents the swap rates and X-axis represents maturity dates.These curves are calibrated and constructed in segments depends on market ... Read More

Difference between deflation and disinflation?

Nagasravan Tamma

Nagasravan Tamma

Updated on 20-May-2022 06:50:33

DeflationIt is decline in goods/services price when rate of inflation falls below zero percentage. It is linked to unemployment and productivity levels of goods/services are low. Deflation acts as economy indicator for deteriorating conditions.Causes of deflation are as follows −Structural changes (capital markets)Productivity increasedWhen decrease in currency supplyEffects of deflation ... Read More

How to Compare interest rate and inflation?

Nagasravan Tamma

Nagasravan Tamma

Updated on 20-May-2022 06:48:58

Interest rateIt is either the cost of money borrowed or reward for saving the money. Generally, interest rates are calculated in terms of percentages. Public borrow money from banks in the form of loans. Banks borrows money from public in form of deposits and pays interest for money deposits. Interest ... Read More

What is the difference between floating currency and fixed currency?

Nagasravan Tamma

Nagasravan Tamma

Updated on 20-May-2022 06:46:56

Let us first see what floating currency is and fixed currency −Floating currencyA floating currency is a monetary system that is not backed by gold or assets. Based on supply and market expectations value of the currency fluctuates. The value of a currency is determined by the level of foreign ... Read More

What is fixed for floating and fixed to fixed swaps?

Nagasravan Tamma

Nagasravan Tamma

Updated on 20-May-2022 06:44:44

The fixed for floating and fixed to fixed swaps are explained below −Fixed for floating swapFixed for floating swap is an agreement between the parties, which involves swapping of fixed rate loan (cash flow interest) of one party to floating rate loans of other party. A company goes for fixed ... Read More

How future contracts are terminated?

Nagasravan Tamma

Nagasravan Tamma

Updated on 18-May-2022 13:52:30

Future contractsThese are a standardized agreements between parties −One party commits to sell stipulated quantity, quality of commodities, securities or any other specific items at particular price on or before future date (agreed in agreement)Daily settlements of all Gains/losses (till status of contract is open)Provides either physical delivery or cash ... Read More

What is net investment hedge?

Nagasravan Tamma

Nagasravan Tamma

Updated on 18-May-2022 13:45:15

It is a specific type of foreign currency cash flow hedge used to reduce or eliminate risk arises to foreign currency of an entity’s net investment in a foreign operation. In other words, it is the hedge designed to remove entity’s changes in net investment value to foreign investment in ... Read More

What is accounting entries for fair value hedge?

Nagasravan Tamma

Nagasravan Tamma

Updated on 18-May-2022 13:41:02

Hedging an asset or liability limits the exposure to extreme changes in its value. Hedging is done to mitigate the risk of loss. Any gain arises through hedging instrument will uplift the item in the financial statement (in case of asset value falls drastically).Accounting for fair value hedges is done ... Read More

What is GAAP and Non-GAAP?

Nagasravan Tamma

Nagasravan Tamma

Updated on 18-May-2022 13:38:02

Let us first understand what GAAP.GAAP (Generally Accepted Accounting Principles)GAAP offers standards for the true and fair value of companies financial wellbeing. It is defined by Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC).Advantages of GAAP includeFacilities consistencyIncrease investors trust.Comparability of financial statements.Decision making.Disadvantages include:Compels financial ... Read More

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