Addition of More Services
Howdy Guys,
To improve your experience in this site and provide you with more services, I was busy with few developmental activities for the last few days. This will be true for the coming few days too. So there is this little request, Please make this site as enriched as possible by contributing from your end. Do fell free to add articles and comments. Help section is nearly complete and will be announced very soon in the welcome page. Also you would like to know that there are a hell lot of features coming your way. So keep expecting more. Any where you see some interesting feature or find something interesting that you would like to experience here in this blog feel free to click the SHOUT BOX link on the side panel and leave your comment. In case of any specific query, you always have my mail id. Its blogs4u@live.com I will feel glad to help you.
Happy Blogging…
Money Matters in NEWS
MIT Pune in Moneymatters@ADMIS – Welcom’em all
A Hearty Welcome to all the new members from MIT Pune visiting the Blog for the first time. All the hlp instructions are mentioned below. Incase you need any help please post in the comments section or mail me directly at blogs4u@live.com
I will be more than happy to help you.
Announcement 2
Congratulations to all the members….
We have got more than 90 visitors in 6 days. That’s a great achievement.
I hope you will contribute more with time.
I request all you guys to post articles also. Please mail them to me so that they can be published.
Other thing is that please post the articles, Questions and Answers in the particular sections only so that clutter in this page can be avoided.
One last thing is that, keep an eye on the right panel. It includes links such as
Recent Comments – This tells about the 7 latest comments that have been submitted.
Recent Posts – This tells about the 3 latest Posts, published on the blog.
My other Blogs – Links you to other blogs related to MBA, like Marketing, Operations, HR and IT. Some of them are not functional as of now, but soon will get functional as when sufficient data is available.
Help us to make this place better..
Happy Blogging…
Regards…
Manish K Gupta
As for New People Joining the Blog … Here are a few tips on how to make the most of this place.
Please feel free to post your research, projects views and opinions on the net. To Post the articles, Mai them to me with the subject line as BLOG.
If you have certain questions regarding to any article you seen in this blog or any issue in general, you can go to that section ( by clicking on the top of the page ) and post your question in the comment box at the bottom of the page.
So Enjoy Guys…
May 2, 2008 at 11:43 am
hi,
segregate the finance blog in the following categories….
Insurance
Equity
Forex
Banking
Treasury
Investment
Mutual Funds
Mergers & acquisitions
May 2, 2008 at 11:51 am
PEG Ratio……..
Like the P/E Ratio, the PEG Ratio is used to get a better understanding of whether or not a company’s stocks is overpriced, underpriced, or just right.
The PEG Ratio uses the P/E Ratio of a company, and compares it with that company’s annual growth rate.
The PEG ratio is calculated as [(price/earnings ratio)] / (earnings growth rate)
PEG ratio less than one tells us that we may have a good investment that is undervalued for the time being.
On the other hand, a result of more than one is usually a sign that the position is valued higher than it should be.
I came across this table which states some observations already made on this front.
PEG ratio
0.50 or less -> Strong Buy
0.50 to .75 ->Buy
0.75 to 1.00 ->Hold
1.00 to 1.25 ->Possible Sell
1.25 to 1.75-> Consider Shorting
Over 1.75 ->Short/Sell
It is used in similar type as the P/E ratio is used and so like P/E, PEG also cannot be used in isolation. Also note that since PEG uses estimation of earnings growth rate, your decision to buy/sell the stock is dependent on the accuracy of your earnings growth estimation. Another thing to note is this ratio is of not much relevance/use in analysis of stocks which have cyclical or erratic cash flows or uneven earnings history.
Like all investment analysis tools, PEG also cannot be used as a single decision making tool; however one can take this as a first step to identify undervalued stocks for further evaluation.
If a company’s stock is fairly priced, then it’s P/E Ratio should equal it’s annual growth rate. It gives a relative measure of value and facilitates comparing firms with different growth rates.
Lets take an example to understand the use of PEG ratio
Stock: ABC Ltd
Earnings: 100
O/S share: 10
EPS = 100 / 10 =10
Market Price: 170
P/E = 170 / 10 =17
Assuming 20% growth in earnings
PEG = 17/20 = 0.85
Based on the easy-to-use thumbnail guide discussed earlier, a PEG of 0.85 would represent an undervalued stock. However, this figure should also be compared to the PEG of the market and to the industry in which ABC Ltd participates.
Comparing this number with peers and the sector will provide the user with much clarity on the use of this ratio.
Happy Posting
Cheers !!
May 2, 2008 at 11:56 am
What r Junk Bonds ????
May 2, 2008 at 11:58 am
Regarding Carbon Credit.
As our nation progresses, the level of production and consumption is increasing energy demands, depleting natural resources, threatening fragile ecosystems and contributing to high levels of pollution. We have been emitting gases or carbon resulting in warming of the globe. Some decades ago a debate started on how to reduce the emission of harmful gases that contributes to the greenhouse effect causing global warming.
Concept of Carbon Credit came into existence as a result of increasing awareness about the need for pollution control that took a formal form after the international agreement between 141 countries, popularly known as Kyoto Protocol. Carbon Credits are ‘certificates’ awarded to countries that are successful in reducing the green house gases (GHG) emissions that cause global warming.
Following are some FAQ’s
Why Carbon Credit Concept came into existence?
Ans: Concept of Carbon credit came into existence as a result of increasing awareness about the need for pollution control.
What is Kyoto Protocol?
Ans: The Kyoto Protocol is an international treaty to reduce GHG (Greenhouse Gases) emissions blamed for global warming. Kyoto Protocol is a voluntary treaty signed by 141 countries.
What are Greenhouse Gases(GHG)?
Ans: The Groups of gases which are responsible for removing greenery from our planet, are called Greenhouse Gases (GHG). There are Six Green house gases under the Kyoto Protocol:
Carbon dioxide (CO2), Methane (CH4), Nitrous oxide (N2O), Hydrofluorocarbons (HFCs) ,Perfluorocarbons (PFCs), Sulphur hexafluoride (SF6)
What are carbon credits?
Ans: Carbon credits are “Entitlement Certificates” issued by the United Nations Framework Convention On Climate Change (UNFCCC)
1 carbon = 1 tonne of carbon dioxide or its equivalent greenhouse gas(GHG).
What is a CER ?
Ans: CER’s or Certified Emissions Reductions are a “certificate” just like a stock. It is given by the CDM Executive Board, for projects, in developing countries to certify that they have reduced green house gas emissions by one tonne of carbon dioxide per year.
What mechanism has been adopted by Kyoto Protocol for countries that have been emitting more carbon & other gases or GHG?
Ans: The Kyoto Protocol provides for the following three mechanisms that enable countries/ operators in developed countries to acquire greenhouse gas reduction credits
Joint Implementation (JI)
Clean Development Mechanism (CDM)
International Emissions Trading (IET)
What is Joint Implementation (JI)?
Ans: Under Joint Implementation (JI) a developed country with relatively high costs of domestic greenhouse reduction would set up a project in another developed country.
What is the Clean Development Mechanism (CDM)?
Ans: Under the Clean Development Mechanism (CDM) a developed country can ’sponsor’ a greenhouse gas reduction project in a developing country where the cost of greenhouse gas reduction project activities is usually much lower, but the atmospheric effect is globally equivalent.
What is International Emissions Trading (IET)
Ans: Under International Emissions Trading (IET) countries can trade in the international carbon credit market to cover their shortfall in allowances. Countries with surplus credits can sell them to countries with capped emission commitments under the Kyoto Protocol.
What makes a project eligible for CDM?
Ans: A project which result in a net decrease in green house gas emissions is eligible for CDM.
11. What is the penalty for non compliance?
Ans: The penalty for non-compliance in the first phase (2007) is Euro40 per tonne of carbon dioxide equivalent. In the second phase (2008), the penalty will be hiked to Euro100 per tonne of carbon dioxide.
12. Who are awarded with carbon credit certificates ?
Ans: Countries that are successful in reducing the green house gases (CHG) emissions causing global warming are awarded with Carbon Credits certificates.
How do it Work?
Ans: If a company, say ‘A’, is able to emit only eight units of greenhouse gases out of 10 units allotted to it, then ‘A’ will be having two units of emission as ‘credit outstanding’ in its ‘pollution’ account.
On the other side, if a company say ‘B’ emits 12 units instead of 10 units allotted to it then ‘B’ will be having two units of ‘debit balance’ in its pollution account.
Now ‘A’ will be able to transfer its two ‘credit balance’ to two debit balance account of ‘B’. So both the companies’ pollution account will be matched and the environment also is able to digest a certain scientifically fixed amount of pollutants. This transfer from ‘A’ to ‘B’ will be for some monetary consideration and hence it is referred as carbon trading.
Cheers and Happy Posting !!!
May 2, 2008 at 5:40 pm
junk bonds r those bonds which r being issued by the companies which do not hav a good track on credit part.
the company gives the interest higher than usual bonds due higher risk. so these r issued mainly in the european and in US market. and if u want to more abt these type of bonds pick any international finance book.
thanks
Chintan Shah
May 3, 2008 at 10:11 am
What is Sub Prime and how does it affect us
May 3, 2008 at 11:40 am
Hi Jatin,
Great article on Carbon Credits.
According to a new study life is gonna be really good for coming 10 years. Read on to know further.
You would like to know that in the coming 10 years ie from 2010 to 2020, mother earth would cancel induced pollution levels. This simply means that we have a period of 10 years in which the climatic variations will remain relatively stable and Homo – Sapiens have a chance to undo the damage at least to an extent which would have otherwise been possible.
The concept of carbon credit as explained by you will play a very important role in this. As the Intergovernmental Panel for pollution control take this study seriously it will definitely impose some restrictions on the member countries and give others some subsidies to take maximum advantage of this window of opportunity.
Let’s see what happens in the upcoming times. Till then happy Blogging….
May 4, 2008 at 9:33 am
Hey guys,
For ppl working in forex dept or treasury….r u guys goin to work on a particular format or as and when u keep gettin information u will keep adding it in yr project….i spoke to my mgr he said i can start by knowin abt export then forex and treasury so in a way i can learn many things…about format infact he said that v can decide as and when v proceed with work….he also said that he will give me some books to read if they r interesting will intimate u asap.
May 7, 2008 at 4:41 am
what is libor rate ?
how and who decides it?
May 7, 2008 at 4:42 am
what is margin requirement for trading?
what are the avg margins offered by ib.
pl. explain with an example
May 7, 2008 at 7:26 am
This is 2 answer Bhiya’s Query
Subprime is a classification of loans offered at rates greater than the prime rate to individuals who are unable qualify for prime rate loans. This usually occurs when borrowers have poor credit and, as a result, the lender views them as higher risk.
Loan qualification is based on a number of factors including income, assets and credit rating. In most cases, Subprime borrowers have questions marks surrounding them in one or more of these areas, such as a poor credit rating or an inability to prove income. For example, someone with a credit rating below 620 or with no assets will likely not qualify for a traditional mortgage and will need to resort to a subprime loan to gain the necessary financing.
Subprime loans are usually used to finance mortgages. They often include prepayment penalties that do not allow borrowers to pay off the loan early, making it difficult and expensive to refinance or retire the loan prior to the end of its term. Some of these loans also come with balloon maturities, which require a large final payment. Still others come with artificially low introductory rates that ratchet upward substantially, increasing the monthly payment by as much as 50%.
the subprime won’t affect much to indian banks but will hit the most 2 Multi National Banks
Happy Learning
cheers!!!
May 7, 2008 at 7:27 am
does any one know to calculate dcf for valuations ??????????
Chintan Shah
May 7, 2008 at 7:33 am
This is for Ashutosh on libor rate
London Interbank Offered Rate (LIBOR)
An interest rate at which banks can borrow funds, in marketable size, from other banks in the London interbank market. The LIBOR is fixed on a daily basis by the British Bankers’ Association. The LIBOR is derived from a filtered average of the world’s most creditworthy banks’ interbank deposit rates for larger loans with maturities between overnight and one full year.
The LIBOR is the world’s most widely used benchmark for short-term interest rates. It’s important because it is the rate at which the world’s most preferred borrowers are able to borrow money. It is also the rate upon which rates for less preferred borrowers are based. For example, a multinational corporation with a very good credit rating may be able to borrow money for one year at LIBOR plus four or five points.
Countries that rely on the LIBOR for a reference rate include the United States, Canada, Switzerland and the U.K.
Cheers!!
happy posting
May 7, 2008 at 9:35 am
Good Work MAnish
May 7, 2008 at 10:00 am
Hi Guys,
Please, to keep this welcome page clean, post your comments in the respective sections. By respective sections I mean, if you have a question on Bonds then first click bonds section then post a comment.
This will keep this page clutter free.
Also keep a track on the Recent Comments Section on the right side of the page. Here you will see the most recent comments posted by visitors.
Also the Link below, Recent Comments ie Recent posts tells, if there is any recent post in the Blog.
Thanks and Happy Blogging…
May 7, 2008 at 4:56 pm
Guys, make use of the shout box feature. Its good thing to leave messages for me or for one another. Just give it a try.
May 10, 2008 at 12:35 pm
SUBPRIME :
In addn. to Jatin’s comments pl. visit the link pasted below
http://www.nera.com/image/SEC_SubprimeSeries_Part1_June2007_FINAL.pdf
May 18, 2008 at 1:47 pm
what are comonents of GDP. i.e how much various sector contribute to national GDP. ?