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Finance GlossaryPrice Band
Price Band
Definition of Price Band
A price band is a regulatory mechanism or a voluntary limit set by an exchange or company that restricts the maximum and minimum price at which a security is allowed to trade for a given day. These bands, which are often expressed as a percentage above and below the previous day's closing price, are mainly implemented to prevent excessive volatility and market manipulation. Trading in the security is stopped or suspended if the price moves outside the set price band.
Related Terms
Gravestone Doji
A Gravestone Doji is a candlestick pattern that signals the reversal of a bullish trend into a bearish one. The key marker of a Gravestone Doji pattern is the open, low, and closing prices being near to one another.
This is a price action type trading strategy that is formed with a tall upper shadow, which is a signal of a bearish reversal.
This is a price action type trading strategy that is formed with a tall upper shadow, which is a signal of a bearish reversal.
Commodity Options
A commodity option is a contract that gives the buyer or seller the right but not the obligation to execute a trade for a commodity like copper, cotton, zinc, and others at a pre-agreed price and date. Commodity options are derivative contracts that require a trader to pay a premium in order to secure the “option”.
Debentures
A debenture is a legal certificate that a company issues in exchange for a long-term unsecured loan. A debt instrument like a debenture is issued by companies who want to fund their business without diluting existing shares.
The components of a debenture are as follows:
The components of a debenture are as follows:
- Principal: The loan amount or the money lent by an investor
- Tenure: The duration of the loan
- Interest rate: The rate of interest
-
Repayment: Terms and conditions of the amount to be repaid
Debenetures can also be issued by small-size companies who may not be creditworthy enough to secure a loan from traditional lenders. Hence, the unsecured aspect of the loan may help achieve their objective.
Cash Flow Statement
A cash flow statement is used to present the amount of money that has been earned and spent by a business over a specific period of time. There are three sections or parts to a cash flow statement:
- Operating Activities: cash flows from the core activities of a business that generate income as well as cash equivalents (current assets & liabilities)
- Investing Activities: cash flows from investments or sales of long term assets
- Financing Activities: an action or activity that brings a change in a business’ equity capital and/or borrowings
Illiquid Asset
An illiquid asset is something of value that can not be exchanged for cash easily. Although an illiquid asset may have value, you will not be able to find buyers for it readily. As a result, illiquid assets are typically sold at a significant discount or worse, lose value and expire.
Unrealized Gain
An unrealized gain refers to the increase in value of an investment that has not yet been sold. For instance, if an investor buys shares at ₹500 and their current market price rises to ₹650, the ₹150 increase is an unrealized gain until the shares are actually sold.
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