A cheque is a negotiable financial instrument we use to settle payments. A cheque can be lost, stolen or the signature of payee can be done by someone else pretending him/her and that’s why the protection of cheques has increased according to an international standard that we must thoroughly consider when writing a cheque. Crossing is a popular method of protecting the payer and payee of a cheque. Both bearer and order cheques can be [...]

Both Futures and Forwards Contracts are agreements to trade or do a deal on a set future date, but there are some significant differences. Futures are highly standardized and should follow the standards, while each and every Forward contract is personalized and unique between the parties interact with the trade or deal. Futures are settled at the end with the details final price; whereas etc on the last trading date of the contract while the [...]

Forex arbitraging is defined as making a grain or profit by buying and selling of currencies which are priced wrong. The market in which trader buys the forex has a lower quote and the market in which the currency is sold has a higher quote for the same currency which allows the trader to make profits out of that transaction. As an example, if a person buys US Dollars for Great Britain Pounds and sells [...]

Minimum Variance Portfolio The minimum variance portfolio theory was adopted from the Portfolio Theory where the variance level of a portfolio is adopted to indicate the risk level of the portfolio. The variance portfolio is defined as a portfolio of assets which has a low beta value when compared to the beta value of the individual financial assets included in the portfolio. Beta value indicates the volatility of the portfolio indicating the risk level attached [...]

Income Hypothesis is mainly about observing consumers’ behavior proportional to their income. This can be divided into three main categories. Permanent Income Hypothesis (PIH) This was formulated by the economist Milton Friedman and it explains that changes in consumption behaviors are not predictable, as they are based on long-term income expectations of customers. The key conclusion is short-term changes in income have a very little effect on consumer spending behavior. In permanent income hypothesis model, [...]