commerce

1. WHAT IS INFLATION?
• Inflation is a rise in prices, which can
be translated as the decline
of purchasing power over time.
• The rate at which purchasing power
drops can be reflected in the average
price increase of a basket of selected
goods and services over some period
of time.

2. INTEREST
• Interest is an amount charged to
the borrower for the privilege of
using.
• Interest is usually calculated as
a percentage of the principal
balance(the amount of money
borrowed).

3. FACTORS DETERMINE INTEREST RATES
• Demand for money
• Level of government borrowing
• Supply of money
• Inflation rate
• RBI & Government policies.

4. SHORT-TERM FINANCIAL OPTIONS
1. Savings bank account, money market/liquid funds and
fixed deposits with banks may be considered as short-term
financial investment options:
2. Savings Bank Account is often the first banking product
people use, which offers low interest (3%-4%p.a.), making
them only marginally better than fixed deposits.
3. Money Market or Liquid Funds are a specialized form of
mutual funds that invest in extremely short-term fixed
income instruments and thereby provide easy liquidity.
Unlike most mutual funds, money market funds are
primarily oriented towards protecting your capital and then,
aim to maximize returns.
1. FD’s

5. LONG TERM FINANCIAL OPTIONS FOR
INVESTMENTS
• Public Provident Fund Account
1. Minimum deposit ₹ 500/- & Maximum deposit ₹ 1,50,000/- in
a Financial year.
2. Loan facility is available from 3rd financial year upto 6th
financial year.
3. Withdrawal is permissible every year from 7th financial year.
4. Account matures on completion of fifteen complete financial
years from the end of the year in which the account was
opened.
5. After maturity, account can be extended for any number for a
block of 5 years with further deposits.
6. Account can be retained indefinitely without further deposit
after maturity with the prevailing rate of interest.

6. POST OFFICE MONTHLY INCOME SCHEME
• The lock-in period for Post Office MIS is 5 years. You can withdraw
the invested amount when the scheme matures or reinvest it.
• Minimum deposit amount: You can start with a nominal initial
investment of Rs.1,000. As per your affordability, you can invest in
multiples of this amount.
• Guaranteed returns: You earn income in the form of interest every
month. The returns are not inflation-beating but are higher
compared to other fixed-income investments like FD.
• You will receive the payout after one month from making the first
investment, and not the beginning of every month.
• Multiple account ownership: You can open more than one account
in your name. But the total deposit amount cannot exceed Rs. 9
lakhs in all of them together.
• Joint account: You can open a joint account with 2 or 3 people. In
this case, an aggregate sum of up to Rs.15 lakhs can be invested in
this account.

7. BONDS
• A bond is a type of security under which the
issuer (debtor) owes the holder (creditor) a debt,
and is obliged – depending on the terms – to repay
the principal (i.e. amount borrowed) of the bond at
the maturity date as well as interest (called
the coupon) over a specified amount of time.
• The interest is usually payable at fixed intervals:
semiannual, annual, and less often at other
periods. Thus, a bond is a form of loan

8. What Is a Mutual Fund?
A mutual fund is a financial vehicle
that pools assets from shareholders to
invest in securities like stocks, bonds,
money market instruments, and other
assets. Mutual funds are operated by
professional money managers who
allocate the fund's assets and attempt
to produce capital gains or income for
the fund's investors.

9. • EQUITY SHARES
• Total equity capital of a company is divided into equal units
of small denomination called as shares.
• Holders of such shares are members of the company and
have voting rights.
• DERIVATIVES
• A derivative is a security with a price that is dependent
upon or derived from one or more underlying assets.
• The derivative itself is a contract between two or more
parties based upon the asset or assets. Its value is
determined by fluctuations in the underlying asset.
• Underlying assets can be equity, foreign exchange etc.

10. • SECURITIES MARKET
• It is a place where buyers and sellers of securities
cab enter into transaction to purchase the and sell
shares, bond, debentures etc.
•
PRIMARY MARKET
• Primary market forms part of the capital market,
which is involved in issuing and selling of new
securities. It may or may not be directly from
corporates.

11. What is the role of the Primary Market?
• The primary market provides the channel for sale of
new securities.
• Primary market provides opportunity to issuers of
securities; Government as well as corporate, to raise
resources to meet their requirements of investment
and/or discharge some obligation.
• They may issue the securities at face value, or at a
discount/premium
• They may issue the securities in domestic market
and/or international market.

12. What is an Initial Public Offer (IPO)?
• An Initial Public Offer (IPO) is the
selling of securities to the public in
the primary market. It is when an
unlisted company makes either a
fresh issue of securities or an offer for
sale of its existing securities or both
for the first time to the public.

13. PROSPECTUS
• A prospectus is a legal disclosure document
that provides information about a company
• The prospectus contains information about
the company, its management team,
recent financial performance, and other
related information that investors would like
to know.

15. SECONDARY MARKET
• Secondary market refers to a market
where securities are traded after being
initially offered to the public in the
primary market on the stock exchange.