Hedge: A combination of two or more securities into a single
investment position for the purpose of reducing or eliminating risk.
Identification: When a person provides a document to a
bank or is being identified by a person, who is known to the bank, it is called
identification. Banks ask for identification before paying an order cheque or a
demand draft across the counter.
Index Fund: A mutual fund that holds shares in proportion to their
representation in a market index, such as the S&P 500.
Initial Public Offering (IPO): An event where a company sells its shares
to the public for the first time. The company can be referred to as an IPO for
a period of time after the event.
Face Value/ Nominal Value: The value of a financial instrument as
stated on the instrument. Interest is calculated on face/nominal value.
Fixed-income Securities: Investment vehicles that offer a fixed
periodic return.
Bouncing of a cheque: Where the name of the endorsee or
transferee is not mentioned on the instrument.
Fixed Rate Bonds: Bonds bearing fixed interest
payments until maturity date.
Floating Rate Bonds: Bonds bearing interest payments that are tied to
current interest rates.
Garnishee Order: When a Court directs a bank to attach the
funds to the credit of customer's account under provisions of Section 60 of the
Code of Civil Procedure, 1908.
General Lien: A right of the creditors to retain possession of all goods
given in security to him by the debtor for any outstanding debt
Factoring: Business of buying trade debts at a discount and making a
profit when debt is realized and also taking over collection of trade debts at
agreed prices.
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