The main difference lies in the motive of the two parties The main motive of the hedger is to hedge(minimize) the risk from the occurence of some events The motive of the speculator is to gamble in the market in order to make the profit by buying/selling the derivative products
Correct Answer: In economic terms, inflation is the rise in the prices of goods and services in the given economy over a period of time As the prices rise, each unit of the country's currency will buy fewer goods and services when the purchasing power of a currency go down then more money comes to the market it is called inflation
2. What is the difference between real money & nominal money?
Correct Answer: Nominal money relates more to it's measure of counting - so nominal figure of what is written on bill, while "real" relates more to it's purchasing power (usually between some periods of time) For instance 100 units in nominal could buy 2 units of good in 1950 and 1 unit of good in 2005, at the same time real value of this 100 nominal units are 100 real units in 1950 and 50 real units in 2005 Same is with GDP In nominal it can rise due to inflation while it can stay the same or even decrease in real value
3. What is the difference between JOURNAL ENTRY & LEDGER?
Correct Answer: A journal is also called as a book of prime entryTransactions occurred are first entered in this book to show which accounts should be debited and which should be credited on the basis of entries made in the journal, accounts are prepared, the book which contains the accounts is called a ledger Transactions entered in the journal are classified according to their nature and posted in their respective accounts in ledger it is also called as book of final entry
4. Why would a company distribute its earnings through dividends to common stockholders?
Correct Answer: Regular dividend payments are signals that a company is healthy and profitable Also, issuing dividends can attract investors (shareholders) Finally, a company may distribute earnings to shareholders if it lacks profitable investment opportunities
Correct Answer: Undergraduates may get this question as feelers of their business knowledge Insider trading describes the illegal activity of buying or selling stock based on information that is not public information This is to prevent those with privileged information (company execs, I-bankers and lawyers) from using this information to make a tremendous amount of money unfairly
Correct Answer: Investment and asset are really close in meaning Investment is when you put your money in stock, bond or other financial instruments Whereas Asset is what you own generally reffered to land, proprietorship , factory, etc
8. Why one rupee note is signed by the ministry of finance? is governer has the right to sign this note? is there any interference by the RBI?
Correct Answer: Rupess is the currency of our country and only govt has the authority to issue indian currency it has been signed by ministry of finance, all other notes are bearer notes which are signed by governor no interference by RBI RBI has the right to print currency notes in the country except coins & 1 Re note which are issued by Govt Thus, it bears the sign of MoF
Correct Answer: It is statement of balances of all the accounts in the ledger prepared to prove the arithmetical accuracy of the books of accounts A trial Balance is a list of Debit and Credit or a list of Debit & Credit Balance of all the ledger accounts prepared on any particular date
Correct Answer: Secondary market refers to market where securities are traded after being initially offered to the public in the primary market and/or listed on the stock exchange