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Mobkey)

The document provides notes on various financial concepts including currency derivatives, financial discipline, portfolio risk, measurement of risk and return, digital currency, and tax planning. Each section outlines key definitions and points, emphasizing the importance of managing finances wisely, understanding investment risks, and utilizing tax strategies. An easy summary at the end encapsulates the main ideas for quick reference.

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5 views4 pages

Mobkey)

The document provides notes on various financial concepts including currency derivatives, financial discipline, portfolio risk, measurement of risk and return, digital currency, and tax planning. Each section outlines key definitions and points, emphasizing the importance of managing finances wisely, understanding investment risks, and utilizing tax strategies. An easy summary at the end encapsulates the main ideas for quick reference.

Uploaded by

mrhxf
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Financial Literacy Notes

Prepared with LATEX

Contents

1 Currency Derivatives – Short Note 2

2 Financial Discipline – Short Note 2

3 Portfolio Risk – Short Note 2

4 Concept of Measurement of Risk and Return 3

5 Digital Currency – Short Note 3

6 Tax Planning – Short Note 4

7 Easy Summary 4

1
Currency Derivatives – Short Note
Meaning
Currency derivatives are contracts whose value depends on the exchange rate of
two currencies (like USD/INR).

Key Points:
• Used to hedge (protect) against currency fluctuations.
• Types: futures, options, forwards.
• Helpful for import-export businesses.
• Manages risk from currency value changes.

Financial Discipline – Short Note


Meaning
Financial discipline means managing your money carefully and responsibly.

Key Points:
• Spend less than you earn.
• Save and invest regularly.
• Avoid unnecessary debts.
• Stick to a budget.
• Helps reach financial goals smoothly.

Portfolio Risk – Short Note


Meaning
Portfolio risk is the chance that your investments may fluctuate or lose value.

Key Points:
• Caused by market ups and downs.
• Reduced by diversification (mixing assets).
• Types: systematic and unsystematic risk.
• Must balance risk with expected return.

2
Concept of Measurement of Risk and Return
Key Concepts
Risk is the possibility of loss. Return is the gain you earn from an investment.

Return Formula:
 
Gain or Profit
Return (%) = × 100
Amount Invested

Example:
Invested 1000, earned 1100:
 
100
Return = × 100 = 10%
1000

Types of Risk:

• Market Risk

• Credit Risk

• Inflation Risk

• Interest Rate Risk

Rule:
Higher risk = Potential for higher return Lower risk = Safer, but lower return

Digital Currency – Short Note


Meaning
Digital currency is money in electronic form, not physical cash.

Key Points:

• Issued by governments (e.g., Digital Rupee) or private (cryptos).

• Used for online payments and transactions.

• Stored in digital wallets.

• Fast, secure, and cashless.

3
Tax Planning – Short Note
Meaning
Tax planning means using legal ways to reduce your tax and save more money.

Key Points:

• Use deductions like 80C, 80D, home loan interest.

• Invest in tax-saving instruments: PPF, ELSS, NPS.

• Avoid tax evasion.

• File returns on time.

• More savings, less tax legally.

Easy Summary
• Currency Derivatives = Protect against currency rate changes.

• Financial Discipline = Smart spending, saving, and planning.

• Portfolio Risk = Investment uncertainty – reduce by diversification.

• Risk & Return = More return usually means more risk.

• Digital Currency = Electronic money (fast secure).

• Tax Planning = Legal ways to reduce tax and grow wealth.

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