The meaning of fixed income instrument in financial markets is as simple as the definition of the word itself – you get a prescribed income from this which is mostly fixed (decided) at the time of investment and when held till maturity of the instrument. For those of us who are interested in receiving a […]

In everyday life, a “floor” is something that supports you — it’s the base you stand on. In finance, the idea isn’t much different. A floor simply means a minimum value something shouldn’t fall below. Whether it’s interest rates, returns or the price of an asset, having a floor helps protect investors from bigger losses. […]

Introduction In everyday life, people make small informal “forward contracts” all the time without calling them that. A shopkeeper might agree today to supply sweets for a wedding next month at a fixed rate. A landlord may lock in the rent for the next year. A farmer might promise a local trader a part of the coming harvest […]

Introduction The Liquidity Adjustment Facility is a daily window through which the central bank adds or absorbs short term money from banks. It helps anchor overnight rates, keeps liquidity orderly, and signals policy intent. When conditions are tight, the tool supplies funds. When money is surplus, it soaks up liquidity wisely. What Is a LAF? […]

Local governments issue municipal bonds to raise funds for public projects like schools, hospitals, bridges etc. Bonds are loans that an investor makes to issuers. On purchase of a bond, an investor receives regular pay-out of interest and the amount is redeemed when the bond matures. However, liquidity in muni markets is not that high […]

Introduction Bonds can be issued by corporations or governments to serve as a source of financing. Those that buy bonds are effectively providing the issuers with a loan. In this case, the issuer promises the bond purchaser periodic interest payments in exchange for the loans. A bond’s maturity date is when your investment will be […]

Introduction Bonds are a great investment tool, both for investors looking to diversify their portfolio and for bond issuers as a way to raise funds. It is a loan that is given by you as an investor to the borrower. Bonds are a fixed income instrument that can be used by a company, governments, and […]

Introduction Money markets are the plumbing of finance: quiet, essential, and mostly out of sight. A Repurchase Agreement—or “repo”—is one of those pipes that keeps cash flowing smoothly. Think of it like borrowing a friend’s scooter for a day and leaving your watch with them until you return it. In a repo, the borrower gets […]

In the realm of structured finance, credit enhancement is a term used to describe a set of techniques employed by financial institutions to reduce the credit risk associated with a particular transaction or asset. There are two types of credit enhancement: internal and external. External credit enhancement, particularly the credit enhancement guarantee, has gained popularity, […]