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.
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.
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.
Foreign Banks: Banks incorporated outside India but operating in
India and regulated by the Reserve Bank of India (RBI),. e..g., Barclays Bank,
HSBC, Citibank, Standard Chartered Bank, etc.
Forfeiting: In International Trade when an exporter finds it
difficult to realize money from the importer, he sells the right to receive
money at a discount to a forfaiter, who undertakes inherent political and
commercial risks to finance the exporter, of course with assumption of a profit
in the venture.
Forgery: when a material alteration is made on a document or a
Negotiable Instrument like a cheque, to change the mandate of the drawer, with
intention to defraud.
Fundamental Analysis: Research to predict stock value
that focuses on such determinants as earnings and dividends prospects,
expectations for future interest rates and risk evaluation of the firm.
Future Value: The amount to which a current deposit will grow over a
period of time when it is placed in an account paying compound interest.
Future Value of an Annuity: The amount to which a
stream of equal cash flows that occur in equal intervals will grow over a
period of time when it is placed in an account paying compound interest.
Futures Contract: A commitment to deliver a certain
amount of some specified item at some specified date in the future.
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.
Guarantee: A contract between guarantor and beneficiary to ensure
performance of a promise or discharge the liability of a third person. If
promise is broken or not performed, the guarantor pays contracted amount to the
beneficiary.
Hedge: A combination of two or more securities into a single
investment position for the purpose of reducing or eliminating risk.
Holder: Holder means any person entitled in his own name to the
possession of the cheque, bill of exchange or promissory note and who is
entitled to receive or recover the amount due on it from the parties. For
example, if I give a cheque to my friend to withdraw money from my bank,he
becomes holder of that cheque. Even if he loses the cheque, he continues to be
holder. Finder cannot become the holder.
Holder in due course : A person who receives a
Negotiable Instrument for value, before it was due and in good faith, without
notice of any defect in it, he is called holder in due course as per Negotiable
Instrument Act. In the earlier example if my friend lends some money to me on
the basis of the cheque, which I have given to him for encashment, he becomes
holder-in-due course.
Hypothecation: Charge against property for an amount of debt where
neither ownership nor possession is passed to the creditor. In pledge,
possession of property is passed on to the lender but in hypothecation, the property
remains with the borrower in trust for the lender.
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