Axis terminology

8/7/2019 Axis terminology

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"Due diligence" is a term used for a number of concepts involving either aninvestigation of a business or person prior to signing a contract, or an act with acertain standard of care . It can be a legal obligation, but the term will morecommonly apply to voluntary investigations. A common example of due diligencein various industries is the process through which a potential acquirer evaluatesa target company or its assets for acquisition .[1]

Due diligence in business transactionsIn business transactions, the due diligence process varies for different type s of companies. The relevant areas of concern may include the financial, legal, labor,tax, IT, environment and market/commercial situation of the company. Other areas include intellectual property, real and personal property, insurance and liability coverage, debt instrument review, employee benefits and labor matters,immigration, and international transactions. [2]

What Does Due Diligence - DD Mean? 1. An investigation or audit of a potential investment. Due diligenceserves to confirm all material facts in regards to a sale.

2. Generally, due diligence refers to the care a reasonable personshould take before entering into an agreement or a transaction withanother party.

Investopedia explains Due Diligence - DD 1. Offers to purchase an asset are usually dependent on the results of due diligence analysis. This includes reviewing all financial records plusanything else deemed material to the sale. Sellers could also perform adue diligence analysis on the buyer. Items that may be considered arethe buyer's ability to purchase, as well as other items that would affectthe purchased entity or the seller after the sale has been completed.

2. Due diligence is a way of preventing un necessary harm to either party involved in a transaction.

BPLR or Benchmark Prime Lending Rate is the rate charged bycommercial banks to their most credit worthy customers. Accordingto the Reserve Bank of India, banks are free to fix their BPLRs butthe interest rates charged by them have to bear relevance to the


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BPLR. Banks are free to fix BPLRs for credit limit beyond Rs.2 lakhs.Lending rates for the agricultural sector was set by the RBI.

W hat is the meaning of benchmark prime lending rate (BPLR )? As on1.7.08, the BPLR of Indian banks was 13.25 per cent but as on 11.8.08,it is 14 per cent. How is it fixed by banks?

According to the Reserve Bank of India (RBI), banks are free to fix theBenchmark Prime Lending Rate (BPLR) with the approval of their respective Boards. Banks are free to decide the BPLR but their interestrates have to have a reference to the BPLR fixed. The BPLR is theinterest rate that commercial banks charge their most credit -worthycustomers


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R etail banking refers to banking in which banking institutions executetransactions directly with consumers, rather than corporations or other banks.Services offered include: savings and transactional accounts , mortgages , personal loans , debit cards , credit cards , and so forth.

Types of banking C ommercial bank has two meanings:

C ommercial bank is the term used for a normal bank to distinguish it froman investment bank. (After the great depression, the U.S. C ongressrequired that banks only engage in banking activities, whereas investment banks were limited to capital markets activities. This separation is nolonger mandatory.)

C ommercial bank can also refer to a bank or a division of a bank that mostly deals with deposits and loans from corporations or largebusinesses, as opposed to normal individual members of the public (retail banking). It is the most successful department of banking.

C ommunity development bank are regulated banks that provide financial services and credit to underserved markets or populations.

P rivate banks manage the assets of high net worth individuals. Offshore banks are banks located in jurisdictions with low taxation and

regulation. Many offshore banks are essentially private banks. Savings banks accept savings deposits.

P ostal savings banks are savings banks associated with national postal systems.

R etail Banking services are also termed as P ersonal Banking services


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C ontingent liabilities are liabilities that may or may not be incurred by an entity depending on the outcome of a future event such as a court case . Theseliabilities are recorded in a company's accounts and shown in the balance sheet when both probable and reasonably estimable. A footnote to the balance sheet describes the nature and extent of the contingent liabilities. The likelihood of lossis described as probable, reasonably possible, or remote. The ability to estimatea loss is described as known, reasonably estimable, or not reasonably estimable

Examples outstanding lawsuits Accounts payable Legal liability Liquidated damages Tort Bills Discounted with bank Unliquidated damages

Destruction by Flood product warranty


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Open market operation is the means of implementing monetary policy by whicha central bank controls the short term interest rate and the supply of basemoney in an economy, and thus indirectly the total money supply . This involvesmeeting the demand of base money at the target rate by buying and sellinggovernment securities , or other financial instruments . Monetary targets suchas inflation, interest rates or exchange rates are used to guide this

implementation. [1][2]

W hen there is an increased demand for base money, action is taken in order tomaintain the short term interest rate (that is, to increase the supply of basemoney). The central bank goes to the open market to buy a financial asset suchas government bonds , foreign currency or gold . To pay for this, bank reserves inthe form of new base money (for example newly printed cash) is transferred tothe sellers bank, and the sellers account is credited. Thus, the total amount of base money in the economy has increased. C onversely, if the central bank sellsthese assets in the open market, the amount of base money that the buyer's bank holds decreases, effectively destroying base money.

Since most money is now in the form of electronic records rather than cash, openmarket operations are conducted simply by electronically increasing or decreasing ('crediting' or 'debiting') the amount of base money that the bank hasin its reserve account at the central bank. Thus, the process does not literally require new currency. (However, this will increase the central bank's requirement to print currency when the member bank demands banknotes, in exchange for adecrease in its electronic balance.

P ossible targets of open market operations Under inflation targeting , open market operations target a specific short term

interest rate in the debt markets. This target is changed periodically toachieve and maintain an inflation rate within a target range. However, other variants of monetary policy also often target interest rates: the US Federal R

eserve , the Bank of England and the EuropeanC

entral Bank use variationson interest rate targets to guide open market operations. Besides interest rate targeting there are other possible targets of open

markets operations. A second possible target is the growth of the money supply , as was the case in the U.S. in the late 1970s through the early 1980sunder Fed C hairman P aul Volcker .


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Under a currency board open market operations would be used to achieveand maintain a fixed exchange rate with relation to some foreign currency.

Under a gold standard , notes would be convertible to gold, so there would beno open market operations. However, open market operations could be used to keep the value of a fiat currency constant relative to gold.

A central bank can also use a mixture of policy settings that change

depending on circumstances. A central bank may peg its exchange rate (likea currency board ) with different levels or forms of commitment. The looser theexchange rate peg, the more latitude the central bank has to target other variables (such as interest rates). It may instead target a basket of foreigncurrencies rather than a single currency. In some instances it is empowered to use additional means other than open market operations, such as changesin reserve requirements or capital controls, to achieve monetary outcomes

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Axis terminology