Strategic allocation is a passive strategy focusing on long-term goals. Tactical allocation involves active short-term deviations to exploit market opportunities.

Sharpe Ratio = (Portfolio Return - Risk Free Rate) / Standard Deviation. A higher Sharpe ratio indicates better risk-adjusted performance.

Gold ETFs combine the flexibility of stock investment with the simplicity of gold investment. Each unit typically represents 1 gram (or less) of gold of 99.5% purity.

Bond prices and interest rates have an inverse relationship. When market rates rise, new bonds offer higher coupons, making existing lower-coupon bonds less attractive, driving their price down.

Systematic risk (e.g., inflation, war, recession) affects the entire market. Diversification removes unsystematic risk (specific to a company), but market risk remains.

Young investors have a longer time horizon to ride out market volatility, making Equities the best asset class for wealth creation due to high long-term returns.

Rental Yield (Annual Rent / Property Value) measures the return generated by a property. It helps compare real estate with other income-generating assets.

Beta measures sensitivity to market movements. Beta = 1 means same volatility as market. Beta = 1.5 means if market moves 10%, the fund moves 15% (High Risk).

SIPs buy more units when prices fall. This reduces the average cost per unit. In a continuously rising market, lump sum investment might mathematically outperform SIP, but SIP manages volatility risk better.

REITs own rent-generating assets (offices, malls). They distribute the majority of this rental income to unit holders as dividends/interest.

"Don't put all your eggs in one basket." Diversification lowers unsystematic risk because different assets react differently to economic events.

While Macaulay Duration measures the weighted average time to receive cash flows, Modified Duration measures the price sensitivity of the bond to interest rate changes.

Standard Deviation measures the dispersion of returns from the mean. It captures Total Risk (both systematic and unsystematic). Beta captures only Systematic Risk.

Real Estate is highly illiquid. Unlike stocks or gold, finding a buyer and completing the legal process takes months, making it unsuitable for emergency funding.

Since Arbitrage Funds invest more than 65% in equity (hedged using derivatives), they are classified as Equity Oriented Mutual Funds for taxation, enjoying lower capital gains tax rates.

SWP allows an investor to withdraw a fixed amount regularly from their mutual fund investment, serving as a pension-like income stream.

Credit Risk Funds take on higher credit risk by investing in lower-rated papers in exchange for higher interest income (Accrual strategy).

SGBs pay interest semi-annually on the nominal value, which is a unique advantage over physical gold or gold ETFs which do not generate regular income.

Portfolios on the Efficient Frontier are optimal. Any portfolio below this line is sub-optimal because it offers less return for the same risk.

Using borrowed money (leverage) to invest increases exposure. If the asset rises, returns are magnified. If it falls, losses are equally magnified.

Peer-to-Peer lending platforms are classified as a special category of Non-Banking Financial Companies (NBFC-P2P).

Index funds simply mimic a market index (like Nifty 50) without active stock selection by a fund manager, resulting in lower costs.

Since it pays no periodic interest ("Zero Coupon"), the return comes from the difference between the discounted issue price and the face value received at maturity.

If the SPV pays tax at the normal rate, dividend is tax-free for the investor. If the SPV opts for the lower tax rate (Sec 115BAA), dividend becomes taxable for the investor.

CAGR is the geometric progression ratio that provides a constant rate of return over the time period. It smoothens out volatility.

Unlike Fundamental Analysis which looks at financial health, Technical Analysis assumes that future price movements can be predicted by analyzing past market data (charts, patterns).

PE involves investing directly in private companies to gain an ownership stake, often with the goal of restructuring and eventually selling for a profit (Exit).

Diversification works best when assets do not move in the same direction. Negative correlation means when one asset falls, the other rises, offsetting losses.

The Expense Ratio is deducted from the fund's assets. A lower ratio means less money is taken out for management fees, leaving more money invested to grow, thus increasing NAV/returns.

Launched by the National Housing Bank (NHB), RESIDEX is India's first official housing price index aimed at tracking property price movements.

The Golden Cross (e.g., 50-day MA crossing above 200-day MA) is a widely interpreted bullish breakout pattern indicating potential market rise.

SID details the investment objective, asset allocation, investment strategy, and risk factors to help investors make informed decisions.

MCX is India's largest commodity derivatives exchange allowing trading in metals, energy, and agricultural commodities.

It breaks down performance to see if the manager added value by picking the right sectors (Allocation) or the right stocks within those sectors (Selection).

Small and Mid-cap companies are in the growth phase. They can grow faster than large established companies but are more vulnerable to economic downturns.

Positive Alpha indicates that the fund manager has outperformed the market (benchmark). Negative Alpha means underperformance.

SGBs have a tenure of 8 years. However, early redemption is allowed after the 5th year from the date of issue on interest payment dates.

While Sharpe Ratio uses Standard Deviation (Total Risk), Treynor Ratio uses Beta (Systematic Risk). It is appropriate for well-diversified portfolios where unsystematic risk has been eliminated.

If a bond with a face value of ?1000 is selling for ?950, it is at a discount. This happens when current interest rates are higher than the bond's coupon rate.

It acts as a market timing strategy. For example, if the stock market is undervalued, a manager might temporarily increase equity exposure above the long-term target.

While MCX leads in metals and energy, NCDEX has a dominant market share in agricultural commodities like chana, soybean, castor seed, etc.

Normally, long-term rates are higher. When short-term rates exceed long-term ones, it suggests investors expect future rates to fall due to a slowing economy/recession.

Art funds pool capital to buy art pieces. SEBI halted many collective investment schemes (Art funds) in the past that were unauthorized, and now they fall under the AIF regulations.

NAV = (Assets - Liabilities) / Number of Units = (100 - 10) / 5 = 90 / 5 = ?18.

Hedge funds are less regulated pools of capital that seek absolute returns using risky strategies. They typically require a very high minimum investment.

Exemption from capital gains tax is available only if the bond is held till maturity. Early redemption or sale on exchange attracts Capital Gains Tax (with indexation benefits usually).

To deepen the market, SEBI reduced the trading lot to 1 unit and application value to the range of ?10,000-15,000, making it accessible to small investors.

AAA is the highest rating assigned by credit rating agencies, signifying the borrower has an extremely strong capacity to meet financial commitments.

It is a top-down approach: First analyze the Economy (Macro), then the specific Industry (Sector), and finally the Company (Financials) to determine fair value.

Category III AIFs employ diverse or complex trading strategies (including leverage and derivatives) and include Hedge Funds.