Microsoft and Acquisitions

Do you know which is the first company acquired by Microsoft? Well, the answer is a company called as ‘SOFTIMAGE’ and this acquisition happened on 28 June 1994.

Today, I found the list of official acquisitions by Microsoft here on the website.
http://www.microsoft.com/msft/acquisitions/history.mspx

You may want to have a look at it know more about it. One of my favorite acquisitions is that of Great Plains software in the year 2000 and of course hotmail. Recently, Microsoft has acquired UK based provider of online mapping and location based services called as ‘Multimap’.


Cheers,
Amol

Hedging in Finance

Most of us do hedging in our daily lives. Hedging is nothing but securing or should I say insuring yourself from the future loss. For example: when you a buy a house, you also take house insurance. This is in order to prevent loss in future if at all disaster happens. Now, this is again nothing but hedging. In such simple scenarios, you can afford to do hedging by just paying the premium to insurance companies. But in financial markets, hedging is not so simple.

Most of the companies do hedging to avoid loss in the future. They typically rely on derivatives. Options and future are typically used derivative types for hedging by investors. These investors could be single person, corporate companies, banks etc.

The common example of future in Indian market could be hedging done by some big IT companies in India. Due to depreciating US dollar, these companies use future derivatives and so that they get good exchange rate on the future rate. Oil companies, for example, might hedge against the price of oil while an international mutual fund might hedge against fluctuations in foreign exchange rates. An understanding of hedging will help you to comprehend and analyze these investments.

Cheers,
Amol

Derivatives in Finance

Derivatives are nothing but instruments whose value is derived from the value of something else. In other words, it can be also called as an asset, whose value is derived from other asset. The main types of derivatives are futures, forwards, options, and swaps.
Derivatives are generally used by institutional investors to increase portfolio return or to hedge portfolio risk.

Now, derivatives can be also grouped in 2 different groups such as: over the counter and exchange-traded derivatives. In case of over the counter derivatives, trading happens directly without going through any exchange.

Cheers,
Amol