Glossary List F

Face Value

Face value is clearly defined as the nominal value of a share or a security printed at the back of the share or bond certificate. The issuing company simply puts the traded security as ‘Value at par’.

FDI

Foreign Direct Investment or FDI is a form of an investment, wherein a foreign country creates investment-fund portfolios in another country for establishing stronger business ties between both the countries. FDIs help the foreign company establish ownership, control administration and acquire business assets in the country where it plans its area of operations in.

Federal Reserve

The Federal Reserve is defined as the Central banking system of the United States of America established during the year 1913.

Feeder funds

Feeder funds are those funds that clearly put all their investment portfolio under the main header fund namely ‘The Master fund’. One legal or financial advisor will look into all funds falling into the aforesaid master fund.

FIAT currencies

FIAT currencies are legal tender purely managed and controlled by the Government of the issuing country. US dollar is a FIAT currency and so are Euros, pounds and other major currencies of the global union.

Fibonacci

Fibonacci series are integers derived from adding the corresponding number to the new number appearing in the series. Say for example (1, 1, 2, 3, 5, 8, 13, etc.). The sequence was developed by a Mathematician named Leonardo Fibonacci during 1175 AD. Quite a lot of financial derivations are derived from Fibonacci analysis.

Financial analysis

Financial analysis is a clear indicator of determining how the company is performing at the market-place. By determining the cash flow statements, profitability statements and balance sheets, financial analysts determine whether the company is in a stable, solid, liquid or in a profitable state to honor the monetary commitment of investment cum stake holders.

Financial planning

Financial planning is a comprehensive analysis of one’s finances to help achieve life goals or aspirations. The holder can buy a house, pursue further studies for siblings or save up for retirement using financial planning strategies.

Fiscal deficit

A fiscal deficit is a glum scenario the economy faces when the total expenditure of the Govt. exceeds the revenue it generates. Deficit usually relates to accumulation of debts over the years.

Fiscal policy

Fiscal policy is a means by which The Govt. adjusts its spending levels and taxation policies to cater to the ever-growing demands of the economy. It is a sister strategy to monetary policy wherein the central bank influences an economy’s money supply.

Fit and proper person

A fit and proper person’s test is a strategy adopted by top management of companies to establish the trustworthiness and code of conduct amongst a group of business employees. This strategy helps the management identify corrupt or fraudulent businessmen and refrain them from serving the group.

Fixed exchange rate system

Fixed exchange rate system is clearly defined as an economic regime in which the Central Govt. ties the official exchange rate of the country against another country’s currency or against the price of gold. This strategy is mainly adopted by the Central bank to maintain a country’s currency value on a very narrow bandwidth.

Fixed Maturity Plan or FMP

Fixed Maturity Plan or FMP’s are investment plans that offer complete capital protection of the investors’ base money and also accrue fixed rate of returns upon maturity of the aforesaid set of schemes. These include fixed deposits, AAA rated corporate bonds, CD’s or Certificate of Deposits, Commercial papers or CP’s, etc.

Flexible exchange rate system

A flexible exchange system is a regime wherein the forex markets determine the value or price of the currency based on the demand and supply of the same. Other currencies of the world also have a huge role to play in determining the value of the currency belonging to a particular economy.

Folio

A single unit of a stock, share or commodity forming a part of the larger investment portfolio is what is known as a folio.

Foreign Currency Convertible Bonds or FCCB

Foreign Currency Convertible bond or FCCB is a kind of a convertible bond. In other words, FCCB bonds are issued in currencies other than the domestic currency of the issuing economy. A convertible bond is an optimal mix of debt and equity giving investment holders enhanced returns over investment.

Foreign Currency Non-Resident Account or FCNR

Foreign Currency Non-Resident account or FCNR is a kind of fixed deposit account wherein the deposits are in the form of income earned abroad. The income accrued in this account can take the shape of the currency in which the deposit is made into the account.

Foreign Exchange Rate

Foreign exchange rate is the rate at which one currency is exchanged against the value of another currency. INR or Indian Rupee can be converted to US dollars using the rate prevailing at the foreign exchange.

Foreign Institutional Investors or FIIs

Foreign Institutional Investors or FII’s are corporate entities or conglomerates established outside India but want to make a sizeable or substantial amount of investment with Indian markets. The FII’s deposit money in the form of securities issued by Indian companies.

Foreign Inward Remittance Certificate

Foreign Inward Remittance Certificates or FIRC are evidential documents for all inward remittances arriving to India. The statutory or legal entities use the document as authentic proof that an individual has received a payment in foreign currency outside of India.

Foreign Portfolio Investors or FPI’s

Foreign Portfolio investors are those cluster of investment holders who own foreign securities or shares passively. The owner of these shares do not directly own or control the financial assets and the securities are relatively liquid, given the volatility of market conditions.

Forward contract

A forward contract is a straight forward agreement or contract between two parties to buy or sell an asset at a specified price but dated for a future point of time. The forward contract with respect to shares, commodities, futures or options make it convenient for investment holders to indulge in hedging or speculation.

Forward price

Forward price is clearly defined as the price pre-determined between the buyer and seller over an underlying security, asset or commodity at a future point of time.

Fresh purchase

Fresh purchase defines the phenomenon behind purchasing the shares, debentures or securities of the company afresh within minutes the issuing company comes up with an IPO (Initial Public Offering). Investors who want to become shareholders for the very first time also have to sign up monetary restriction documents.

FRF

FRF is an acronym for Financial Reporting Framework. It is an accounting strategy to determine, measure and recognize all material items appearing on the financial statements of a company.

Front running

Brokers have access to orders of investors much in advance. If they use the information illegally and transact the dealings on behalf of their clients, just to obtain profits into their personal accounts, such a foul practice is referred to as front running.

Fund

A fund refers to the sum total of all financial resources belonging to a firm. These include cash at hand, bank balance and accounts receivables. A fund is also a specified sum of money that is ear-marked or allocated towards a particular financial scheme.

Funded debt

A fund debt forms a part of the company’s borrowed capital in the form of debentures, long-term notes payables or bonds. These form a part of the funded debt mainly because the underlying components are funded with interest payments by the borrowing firm to lenders or investment holders.

Fund manager

A fund manager is the person responsible for implementing a fund’s investing strategy and managing its core range of portfolio trading activities. Fund managers are paid a certain percentage of fund’s average also known as Assets under Management or AUM.

Fund of Funds or FOF

A fund of funds is an investment strategy that deals with investing with multiple forms of underlying assets or into instruments of investments rather than a single form of investment. A fund of funds therefore comprises of a mixed bag of investment portfolio consisting of varied proponents of investment.

Futures

Futures refer to buying and selling of shares, securities or other forms of underlying assets at a specified price over a future point of time.