DEPRECIATION
In simple words we can say that depreciation is the reduction in the value of an asset due to usage, passage of time, wear and tear, technological outdating or obsolescence, depletion, inadequacy, rot, rust, decay or other such factors.
. In straight – line depreciation the asset’s notional life divides the asset value in equal parts, i.e., for a 10 – year life the annual depreciation is 10%.
In accelerated depreciation larger amounts are written off in the earlier years of an asset’s life, to enable the company to qualify for larger tax deductions at the initial stage, and invest in expansion and growth.
Depreciation is used in accounting to try to match the expense of an asset to the income that the asset helps the company earn. For example, if a company buys a piece of equipment for $1 million and expects it to have a useful life of 10 years, it will be depreciated over 10 years. Every accounting year, the company will expense $100,000 (assuming straight-line depreciation), which will be matched with the money that the equipment helps to make each year.
Examples of currency depreciation are the infamous Russian ruble crisis in 1998, which saw the ruble lose 25% of its value in one day.
DEMATERIALISATION OF SCRITS
Making stock trading scripless, all transactions being computerized and electronically entered into a ledger; an outcome of the options market.
DERIVATIVE
it is a so called financial asset because it derives its value form an underlying asset, which can be anything from company’s stocks or bonds or commodity or a currency – used to hedge or maintain an open position.
DISCOUNTED DEBENTURES
Debentures which sell at less than their par value are discounted debentures .Consequently their interest yield is higher than that promised on the face velue of the debenture. Discounted debentures can offer a higher rate of return than fixed deposits with companies, as well as better security.