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Sunday, January 15, 2012
What are Exchange Traded Funds
ETFs and Gold ETFs
An Exchange Traded Fund (ETF) is a security that trades on a stock exchange and generally tracks the performance of an index. It is a single stock representing a basket of securities underlying the index which can be comprised of stocks, bonds, or other assets such as commodities. However, ETFs have evolved over recent years to allow for exposure to alternative asset classes, the implementation of more sophisticated investment strategies, and even active management.
Gold Exchange Traded Funds (ETFs) are open ended mutual funds that are passively managed and most of them seek to mirror the return of an index, a commodity or a basket of assets. ETFs are listed and traded on stock exchanges like stocks. They enable investors to gain broad exposure to indices or defined underlying asset (commodity) with relative case, on a real-time basis, and at a lower cost than many other forms of investing.
Gold ETFs provided investors a means of participating in the gold bullion market without the necessity of taking physical delivery of gold, and to buy and sell that participation through the trading of a security on stock exchange. Gold ETF would be a passive investment; so, when gold prices move up, the ETF appreciates and when gold prices move down, the ETF loses value.
Gold ETF tracks the performance of Gold Bullion. Gold ETFs provide returns that, before expenses, closely correspond to the returns provided by physical Gold. Each unit is approximately equal to the price of 1 gram of Gold. But, there are Gold ETFs which also provide a unit which is approximately equal to the price of ½ gram of Gold.
Gold ETFs provided investors a means of participating in the gold bullion market without the necessity of taking physical delivery of gold, and to buy and sell that participation through the trading of a security on stock exchange. Gold ETF would be a passive investment; so, when gold prices move up, the ETF appreciates and when gold prices move down, the ETF loses value.
Gold ETF tracks the performance of Gold Bullion. Gold ETFs provide returns that, before expenses, closely correspond to the returns provided by physical Gold. Each unit is approximately equal to the price of 1 gram of Gold. But, there are Gold ETFs which also provide a unit which is approximately equal to the price of ½ gram of Gold.
Source:equitybulls
Financial Market Jargons
Some Financial Market Terminologies
Bear Market
A market in which stock prices are falling.
A market in which stock prices are falling.
Bonds
Promissory notes issued by a corporation or government to its lenders, usually with a specified amount of interest for a specified length of time.
Promissory notes issued by a corporation or government to its lenders, usually with a specified amount of interest for a specified length of time.
Bull Market
A market in which stock prices are rising.
A market in which stock prices are rising.
Commodities
Products used for commerce that are traded on a separate, authorized commodities exchange. Commodities include agricultural products and natural resources such as timber, oil and metals. Commodities are the basis for futures contracts traded on these exchanges.
Products used for commerce that are traded on a separate, authorized commodities exchange. Commodities include agricultural products and natural resources such as timber, oil and metals. Commodities are the basis for futures contracts traded on these exchanges.
Debenture
A long-term debt instrument issued by corporations or governments that is backed only by the integrity of the borrower, not by collateral. A debenture is unsecured and subordinate to secured debt. A debenture is unsecured in that there are no liens or pledges on specific assets.
A long-term debt instrument issued by corporations or governments that is backed only by the integrity of the borrower, not by collateral. A debenture is unsecured and subordinate to secured debt. A debenture is unsecured in that there are no liens or pledges on specific assets.
Delist
The removal of a security's listing on a stock exchange. This is done when the security no longer exists, the company is bankrupt, the public distribution of the security has dropped to an unacceptably low level, or the company has failed to comply with the terms of its listing agreement.
The removal of a security's listing on a stock exchange. This is done when the security no longer exists, the company is bankrupt, the public distribution of the security has dropped to an unacceptably low level, or the company has failed to comply with the terms of its listing agreement.
Exchange-Traded Fund (ETF)
A special type of financial trust that allows an investor to buy an entire basket of stocks through a single security, which tracks and matches the returns of a stock market index. ETFs are considered to be a special type of index mutual fund, but they are listed on an exchange and trade like a stock. Also known as an index participation unit (IPU).
A special type of financial trust that allows an investor to buy an entire basket of stocks through a single security, which tracks and matches the returns of a stock market index. ETFs are considered to be a special type of index mutual fund, but they are listed on an exchange and trade like a stock. Also known as an index participation unit (IPU).
Inflation
An overall increase in prices for goods and services, usually measured by the percentage change in the Consumer Price Index.
An overall increase in prices for goods and services, usually measured by the percentage change in the Consumer Price Index.
Initial Public Offering (IPO)
A company's first issue of shares to the general public.
A company's first issue of shares to the general public.
Insider Trading
There are two types of insider trading. The first type occurs when insiders trade in the stock of their company. Insiders must report these transactions to the appropriate securities commissions. The other type of insider trading is when anyone trades securities based on material information that is not public knowledge. This type of insider trading is illegal.
There are two types of insider trading. The first type occurs when insiders trade in the stock of their company. Insiders must report these transactions to the appropriate securities commissions. The other type of insider trading is when anyone trades securities based on material information that is not public knowledge. This type of insider trading is illegal.
Market Maker
A trader employed by a securities firm who is required to maintain reasonable liquidity in securities markets by making firm bids or offers for one or more designated securities up to a specified minimum guaranteed fill. Market makers for the stock of issuers listed on Toronto Stock Exchange are referred to as Registered Traders.
Mutual Fund
A fund managed by an expert who invests in stocks, bonds, options, money market instruments or other securities. Mutual fund units can be purchased through brokers or, in some cases, directly from the mutual fund company.
A fund managed by an expert who invests in stocks, bonds, options, money market instruments or other securities. Mutual fund units can be purchased through brokers or, in some cases, directly from the mutual fund company.
New Issuer Listing - IPO (Initial Public Offering)
An IPO (initial public offering) is an issuer's first offering of its securities made to the public in accordance with a prospectus. The offering is often made in conjunction with an issuer's initial application for listing on an exchange.
An IPO (initial public offering) is an issuer's first offering of its securities made to the public in accordance with a prospectus. The offering is often made in conjunction with an issuer's initial application for listing on an exchange.
Over-The-Counter (OTC) Market
The market maintained by securities dealers for issues not listed on a stock exchange. Almost all bonds and debentures, as well as some stocks, are traded over-the-counter in Canada. An OTC market is also known as an unlisted market.
The market maintained by securities dealers for issues not listed on a stock exchange. Almost all bonds and debentures, as well as some stocks, are traded over-the-counter in Canada. An OTC market is also known as an unlisted market.
Preferred Share
A class of share capital that entitles the owner to a fixed dividend ahead of the issuer's common shares and to a stated dollar value per share in the event of liquidation. It usually does not have voting rights, unless a stated number of dividends have been omitted.
A class of share capital that entitles the owner to a fixed dividend ahead of the issuer's common shares and to a stated dollar value per share in the event of liquidation. It usually does not have voting rights, unless a stated number of dividends have been omitted.
Prospectus
A legal document describing securities being offered for sale to the public. It must be prepared in accordance with provincial securities commission regulations. Prospectus documents usually disclose pertinent information concerning the company's operations, securities, management and purpose of the offering.
A legal document describing securities being offered for sale to the public. It must be prepared in accordance with provincial securities commission regulations. Prospectus documents usually disclose pertinent information concerning the company's operations, securities, management and purpose of the offering.
Put Option
A put option is a contract that gives the holder the right to sell a specified number of shares at a stated price within a fixed time period. Put options are purchased by those who think a stock may decline in price.
A put option is a contract that gives the holder the right to sell a specified number of shares at a stated price within a fixed time period. Put options are purchased by those who think a stock may decline in price.
Securities
Transferable certificates of ownership of investment products such as notes, bonds, stocks, futures contracts and options.
Transferable certificates of ownership of investment products such as notes, bonds, stocks, futures contracts and options.
Settlement
The process that follows a transaction when the seller delivers the security to the buyer and the buyer pays the seller for the security.
The process that follows a transaction when the seller delivers the security to the buyer and the buyer pays the seller for the security.
Share Certificate
A paper certificate that represents the number of shares an investor owns.
A paper certificate that represents the number of shares an investor owns.
Short Selling
The selling of a security that the seller does not own (naked or uncovered short) or has borrowed (covered short). Short selling is a trading strategy. Short sellers assume the risk that they will be able to buy the stock at a lower price, cover the outstanding short, and realize a profit from the difference.
The selling of a security that the seller does not own (naked or uncovered short) or has borrowed (covered short). Short selling is a trading strategy. Short sellers assume the risk that they will be able to buy the stock at a lower price, cover the outstanding short, and realize a profit from the difference.
Underwriting
The purchase for resale of a new issue of securities by an investment dealer or group of dealers who are also known as underwriters. The formal agreements for these transactions are called underwriting agreements.
The purchase for resale of a new issue of securities by an investment dealer or group of dealers who are also known as underwriters. The formal agreements for these transactions are called underwriting agreements.
Warrant
A security giving the holder the right to purchase securities at a stipulated price within a specified time limit. Exercise of the warrant is solely at the discretion of the holder. Warrants are not exercisable after the expiry date. A warrant is often issued in conjunction with another security as part of a financing. A warrant may be traded as a listed security or it may be held privately.
A security giving the holder the right to purchase securities at a stipulated price within a specified time limit. Exercise of the warrant is solely at the discretion of the holder. Warrants are not exercisable after the expiry date. A warrant is often issued in conjunction with another security as part of a financing. A warrant may be traded as a listed security or it may be held privately.
Source:tmxmoney
Memorandum of Understanding
A document that conveys joint treaty on any subject between two or more parties. Memorandum of understanding is generally acknowledged as obligatory, even if no lawful claim could be based on the rights and obligation laid down in them. To be legally effective, a memorandum of understanding must:-
(1) Identify the parties in contract,
(2) Explain the subject matter of the agreement and its objectives.
(3) Summarize the essential terms of the agreement.
(4) Must be signed by the contracting parties. Also known as Letter of Intent.
Friday, January 13, 2012
S.72 Set off and Carry Forward of Losses - In the Case of Nandi Steels
Section 72: Set Off and Carry Forward of Losses Explained
Gains on Fixed Assets Vs. Set Off of Business Loss u/s 72
M/S. Nandi Steels Limited, Bangalore
Vs
Asstt. Commissioner of Income Tax, Bangalore
Section 72: Gains arising from “business assets” not eligible for set-off against brought forward business loss
The assessee sold land & building used for business purposes. Though the gain was offered as capital gains, the assessee claimed, relying on Cocanada Radhaswami Bank Ltd 57 ITR 306 (SC) and other judgements, that as the assets were “business assets”, the gains arising from such business assets were eligible for set-off against the brought forward business loss u/s 72.
The issue was referred to a Special Bench. HELD by the Special Bench against the assessee:
S. 72 (1) defines that the business loss brought forward shall be set-off against the “profits & gains of any business or profession” of the subsequent year. The expression “profits & gains of business” means income earned from the business carried on by the assessee and not the income connected to the business or profession carried/practiced by the assessee. The land & building were fixed & capital assets used or the business purposes. Therein the gains arising are assessable as capital gains and were not eligible for set-off against the brought forward business loss u/s 72. For detailed Judgement - click here
(Cases Followed: Express Newspapers 53 ITR 250 (SC); Cocanada Radhaswami Bank 55 ITR 17(SC) distinguished; Steelcon Industries reversed)
Friday, November 11, 2011
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