What is Bilateral Netting? Bilateral netting is a legally enforceable arrangement between a bank and a counterparty that creates a single legal obligation covering all included individual contracts.The process of consolidating swap agreements between two parties into a single agreement. This means that a bank’s obligation, in the event of the default or insolvency of one of … [Read more...]
Yield Tilt Index Fund
An alternative to a pure index fund, a yield tilt fund diversifies its holdings among a universe of stocks that is "tilted" in the direction of higher yield, such as the high-yield stocks that comprise the S&P 500. Yield tilt funds are based on the assertion that, since dividend income is taxed at higher rates, the market must compensate for this taxation by providing … [Read more...]
Inflation Derivatives
An Inflation Derivative is a subclass of derivative that is used by individuals to mitigate the effects of potentially large levels of inflation. Swaps are the most common types of inflation derivatives, in which a counterparty’s cash flows are linked to a price index and the other counterparty is linked to a conventional fixed or floating cash flow. In finance, inflation … [Read more...]
DEPRECIATION AND SHARES
DEPRECIATION In simple words we can say that depreciation is the reduction in the value of an asset due to usage, passage of time, wear and tear, technological outdating or obsolescence, depletion, inadequacy, rot, rust, decay or other such factors. . In straight – line depreciation the asset’s notional life divides the asset value in equal parts, i.e., for a 10 – year life … [Read more...]