Podcast
Questions and Answers
IRS- Interest Rate Swaps: An interest rate swap is an interest rate derivative. It involves exchange of interest rates between two parties. • FRA - Forward Rate Agreements: A Forward Rate Agreement (FRA) is a financial contract between two parties to exchange interest payments for a `notional principal' amount on settlement date. • Collateralized Borrowings and Lending Obligation (CBLO): The Collateralized Borrowing and Lending Obligation (CBLO) market is a money market segment operated by the Clearing Corporation of India Ltd (CCIL). In the CBLO market, financial entities can avail short term loans by providing prescribed securities as collateral. In terms of functioning and objectives, the CBLO market is almost similar to the call money market. • CDs (Certificate of Deposits) are short-term borrowings in the form of Usance Promissory Notes having a maturity of not less than 15 days up to a maximum of one year. • Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note. • Who can issue Commercial Paper (CP)?: Highly rated corporate borrowers, primary dealers (PDs) and satellite dealers (SDs) and all-India financial institutions (FIs). • A 'Future' is a contract to buy or sell the underlying asset for a specific price at a predetermined time. If you buy a futures contract, it means that you promise to pay the price of the asset at a specified time. If you sell a future, you effectively make a promise to transfer the asset to the buyer of the future at a specified price at a particular time. Every futures contract has the following features: - Buyer - Seller - Price - Expiry
IRS- Interest Rate Swaps: An interest rate swap is an interest rate derivative. It involves exchange of interest rates between two parties. • FRA - Forward Rate Agreements: A Forward Rate Agreement (FRA) is a financial contract between two parties to exchange interest payments for a `notional principal' amount on settlement date. • Collateralized Borrowings and Lending Obligation (CBLO): The Collateralized Borrowing and Lending Obligation (CBLO) market is a money market segment operated by the Clearing Corporation of India Ltd (CCIL). In the CBLO market, financial entities can avail short term loans by providing prescribed securities as collateral. In terms of functioning and objectives, the CBLO market is almost similar to the call money market. • CDs (Certificate of Deposits) are short-term borrowings in the form of Usance Promissory Notes having a maturity of not less than 15 days up to a maximum of one year. • Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note. • Who can issue Commercial Paper (CP)?: Highly rated corporate borrowers, primary dealers (PDs) and satellite dealers (SDs) and all-India financial institutions (FIs). • A 'Future' is a contract to buy or sell the underlying asset for a specific price at a predetermined time. If you buy a futures contract, it means that you promise to pay the price of the asset at a specified time. If you sell a future, you effectively make a promise to transfer the asset to the buyer of the future at a specified price at a particular time. Every futures contract has the following features: - Buyer - Seller - Price - Expiry
