Spot Deal A spot deal is one where foreign exchange is sold or purchased for immediate delivery or latest delivery within two days. the rate at which such deals are conducted is known as the spot rate. In majority of transactions currency is bought or sold for immediate delivery. “Spot” rate refers to transaction that… Read More »
Transferable LC A transferable LC is designated as transferable by the LC issuing bank, under which the beneficiary (first beneficiary) may request the advising bank (the transferring bank) to make the credit available in whole or in part to one or more other Beneficiary(ies) (second beneficiary(ies). Such Credits are governed by Article 48 of… Read More »
Red Clause LC and Green Clause LC What is Red Clause LC? A Red Clause LC is a documentary credit with a special clause incorporated in it, authorizing the advising bank or the conforming bank to make advances to the beneficiary before presentation of documents stipulated therein. It will have the following information. Green Clause LC What is Green Clause LC? This clause… Read More »
Interest Rate and Exchange Rate The question of interest rate arises when currencies are borrowed or lent; whereas exchange rates are involved when different currencies are being bought or sold. The exchange rate is subject to more fluctuations than interest rates. Interest rate effect The interest rate is a factor that affects the exchange rate. High… Read More »
What is the difference between Hedging and Speculating? What is hedging? Hedging means avoiding or covering foreign exchange risk. The need of hedging arises because exchange rate fluctuates continuously. Accordingly, individuals, companies, and banks who expect to make or receive payments in foreign currencies at a future date face the risk of going to pay… Read More »
Online Stock Trading A century ago the stock market was not in shape. Today, the development of doing business online has also simplified stock trading. It was very different from what we know today as online stock trading. With the movement of time, the online stock trading developed more and more. Now it is turned… Read More »
What is a hurdle rate? Hurdle rate refers to the lowest amount of rate that a company is likely to earn from the investment in a project. Therefore, in capital budgeting, hurdle rate is also recognized as the target rate or required rate of return of that company. It is essential for a project as… Read More »
What is a long-term asset? The asset that cannot be turned into cash and needs to be consumed within a specific duration of one year from the date mentioned in the heading a balance sheet is considered as a long-term asset. However, when a company follows an operating cycle longer than one year, there is… Read More »
What is Zero-Based Budgeting? The idea of zero-based budgeting was introduced in the year 1960. The concept was initially used for government and business organizations. It is the budget planning procedure for the revolution of the organization’s program and expenditures. Zero based budget definition What is zero-based budgeting? In management accounting, zero-based budgeting refers to… Read More »
Lease or Buy Decision for Business In order to run a business, diverse kinds of equipment are required. To fulfill the requisite, it is not necessary to buy each and every item. Therefore, decision must be taken adequately on the issue of lease and buy. Based on need, goal and budget, choices are made mostly.… Read More »