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1. Assessee Definition: An "assessee" is any person who is liable to pay taxes or any other sum of money under the Income Tax Act. It also includes individuals who are liable for filing returns, persons against whom proceedings have been initiated, or individ...

Residential Status Under Income Tax Act Determining the residential status of an individual or entity is a crucial step for the Income Tax Department in India as it directly influences the taxability of income. The residential status defines the scope of incom...

Income can be derived from various sources, and the nature of this income can vary significantly. For tax purposes, it is crucial to identify the different kinds of income that a taxpayer may earn. These can include salaries, rental income, business profits, c...

The concept of tax incidence is a fundamental aspect of tax policy and economics, addressing a key question: who ultimately bears the burden of a tax? While it may seem straightforward that the entity legally obligated to pay a tax should bear its full cost, t...

In India, taxpayers often seek ways to reduce their tax liability through various exemptions provided under the Income Tax Act, 1961. These exemptions allow certain types of income to be fully or partially tax-free, encouraging savings, investment, and specifi...

Capital Expenditure vs. Revenue Expenditure - Under the Income Tax Act Since the Income Tax Act does not explicitly define "capital expenditure" and "revenue expenditure," we must rely on their ordinary meanings and judicial interpretations. Below are some key...

Definition Modern Portfolio Theory (MPT), introduced by Harry Markowitz in 1952, provides a framework to assemble a portfolio of assets such that the expected return is maximized for a given level of risk, or the risk is minimized for a given level of expected...

Portfolio Return Portfolio return is the overall gain or loss achieved by a combination of investments held in an investor's portfolio over a specific period. It reflects the cumulative financial outcome of all investment activities and decisions within the po...

The Efficient Frontier is a fundamental concept in Modern Portfolio Theory (MPT) introduced by Harry Markowitz in his seminal paper in 1952. The Efficient Frontier represents a set of portfolios that provides the highest expected return for a given level of ri...

The Capital Asset Pricing Model (CAPM) is a foundational finance theory that describes the relationship between systematic risk and expected return for assets, particularly stocks. Developed in the 1960s by Jack Treynor, William Sharpe, John Lintner, and Jan M...

Single Index Model The Single Index Model (SIM) is a simplified way to estimate the return of a security based on the return of the market index and the specific security's unique characteristics. Developed by William Sharpe, it's a more practical alternative ...

Arbitrage Pricing Theory, developed by Stephen Ross in 1976, is a multi-factor asset pricing model that determines the return of an asset based on multiple sources of systematic risk. It offers a more flexible alternative to the Capital Asset Pricing Model (CA...

Capital Market Line (CML) The Capital Market Line (CML) is a graphical representation used in the Capital Asset Pricing Model (CAPM) to illustrate the rates of return for efficient portfolios depending on their level of risk (standard deviation). The CML is a ...

Portfolio evaluation is the process of assessing the performance of an investment portfolio to determine its effectiveness in achieving the dual objectives of minimizing risk and maximizing returns. This evaluation involves comparing the returns of a portfolio...

Investment objectives and constraints form the cornerstone of any effective investment strategy. Understanding and clearly defining these elements is crucial for aligning an investment plan with an individual's or institution's financial goals and operational ...

The selection of an asset mix is a critical step in investment strategy. It involves deciding the proportion of various asset classes in an investment portfolio. This decision directly impacts both the potential return and the risk level of the portfolio. What...

Formulating a portfolio strategy is a fundamental process in investment management that involves designing a plan to meet specific investment goals while adhering to the investor’s risk tolerance and time horizon. This strategy guides the selection and allocat...

The selection of securities is a critical process in building an investment portfolio. It involves choosing individual stocks, bonds, or other financial instruments that meet specific investment criteria based on the investor's goals, risk tolerance, and marke...

Portfolio execution refers to the actual process of buying and selling securities to construct or adjust an investment portfolio. This phase is crucial for implementing the investment strategy that has been carefully planned based on the investor's goals, risk...

Portfolio revision involves the process of reviewing and adjusting the components of an investment portfolio to ensure it remains aligned with the investor's objectives, risk tolerance, and market conditions. This periodic reassessment is essential to managing...