Derivatives are financial contracts whose value is based on an underlying asset such as a commodity, bond, currency or stock. They can be used for hedging risks from price movements, speculating on prices, or gaining exposure to markets. Common derivatives include forwards, futures, options, and swaps. Most are traded over-the-counter or on exchanges. Derivatives are one of the three main categories of financial instruments along with stocks and debt.
This ppt is prepared to provide detailed information regarding Forwards and Futures contracts of Derivatives the topics covered under this are Meaning of Forwards contracts, Underlying Assets of Forwards contracts, FEATURES OF FORWARD CONTRACTS, Tailored made, Why Forwards contracts, FUTURES CONTRACT, What is A Futures Contract, Characteristics of Futures contracts, Mechanism of Trading in Futures Market, Margin requirement, Marking-to-market (M2M), SETTLING A FUTURE POSITION, OFFSETTING, CASH DELIVERY, by Sundar, Assistant Professor of commerce.
Subscribe to Vision Academy for Video assistance
https://www.youtube.com/channel/UCjzpit_cXjdnzER_165mIiw
This ppt is prepared to provide detailed information regarding Forwards and Futures contracts of Derivatives the topics covered under this are Meaning of Forwards contracts, Underlying Assets of Forwards contracts, FEATURES OF FORWARD CONTRACTS, Tailored made, Why Forwards contracts, FUTURES CONTRACT, What is A Futures Contract, Characteristics of Futures contracts, Mechanism of Trading in Futures Market, Margin requirement, Marking-to-market (M2M), SETTLING A FUTURE POSITION, OFFSETTING, CASH DELIVERY, by Sundar, Assistant Professor of commerce.
Subscribe to Vision Academy for Video assistance
https://www.youtube.com/channel/UCjzpit_cXjdnzER_165mIiw
The foreign exchange market or forex market as it is often called is the market in which currencies are traded.
Currency Trading is the world’s largest market consisting of almost trillion in daily volumes
The market continues to rapidly grow. Not only is the forex market the largest market in the world, but it is also the most liquid, differentiating it from the other markets.
There is no central marketplace for the exchange of currency, but instead the trading is conducted over-the-counter.
This decentralization of the market allows traders to choose from a number of different dealers to make trades with and allows for comparison of prices. Typically, the larger a dealer is the better access they have to pricing at the largest banks in the world, and are able to pass that on to their clients.
The spot currency market is open twenty-four hours a day, five days a week, with currencies being traded around the world in all of the major financial centers.
All trades that take place in the foreign exchange market involve the buying of one currency and the selling of another currency simultaneously. This is because the value of one currency is determined by its comparison to another currency.
The first currency of a currency pair is called the “base currency,” while the second currency is called the counter currency. The currency pair shows how much of the counter currency is needed to purchase one unit of the base currency.
Currency pairs can be thought of as a single unit that can be bought or sold. When purchasing a currency pair, the base currency is being bought, while the counter currency is being sold.
Forex Capital Markets (FXCM) is an online currency trading firm that offers a free demo account to traders who are new and interested in the foreign exchange market.
It allows you to experience every step of currency trading including choosing currency pairs, deciding how much risk to take, tracking the time and dates of placed trades, deciding how long to stay in the trade, and when to exit the trade. It also allows the placing of stop and limit orders on trades.
Information about trading and specifically about how to use the online trading platform can be found on the FXCM webpage. In addition, FXCM offers FREE interactive online seminars that are extremely useful to both new and experienced currency traders.
Characteristics of foreign exchange
Its huge trading volume representing the largest asset class in the world leading to high liquidity;
Its geographical dispersion;
Its continuous operation: 24 hours a day except weekends, i.e., trading from 20:15 GMT on Sunday until 22:00 GMT Friday;
The variety of factors that affect exchange rates;
The low margins of relative profit compared with other markets of fixed income;
The use of leverage to enhance profit and loss margins and with respect to account size.
Definition of Stock Exchange : The securities regulation act of 1956 defined stock exchange as “an association , organization , or a individual which is established for for the purpose of assisting , regulating , and controlling business in buying ,selling and dealing in securities.”
The foreign exchange market or forex market as it is often called is the market in which currencies are traded.
Currency Trading is the world’s largest market consisting of almost trillion in daily volumes
The market continues to rapidly grow. Not only is the forex market the largest market in the world, but it is also the most liquid, differentiating it from the other markets.
There is no central marketplace for the exchange of currency, but instead the trading is conducted over-the-counter.
This decentralization of the market allows traders to choose from a number of different dealers to make trades with and allows for comparison of prices. Typically, the larger a dealer is the better access they have to pricing at the largest banks in the world, and are able to pass that on to their clients.
The spot currency market is open twenty-four hours a day, five days a week, with currencies being traded around the world in all of the major financial centers.
All trades that take place in the foreign exchange market involve the buying of one currency and the selling of another currency simultaneously. This is because the value of one currency is determined by its comparison to another currency.
The first currency of a currency pair is called the “base currency,” while the second currency is called the counter currency. The currency pair shows how much of the counter currency is needed to purchase one unit of the base currency.
Currency pairs can be thought of as a single unit that can be bought or sold. When purchasing a currency pair, the base currency is being bought, while the counter currency is being sold.
Forex Capital Markets (FXCM) is an online currency trading firm that offers a free demo account to traders who are new and interested in the foreign exchange market.
It allows you to experience every step of currency trading including choosing currency pairs, deciding how much risk to take, tracking the time and dates of placed trades, deciding how long to stay in the trade, and when to exit the trade. It also allows the placing of stop and limit orders on trades.
Information about trading and specifically about how to use the online trading platform can be found on the FXCM webpage. In addition, FXCM offers FREE interactive online seminars that are extremely useful to both new and experienced currency traders.
Characteristics of foreign exchange
Its huge trading volume representing the largest asset class in the world leading to high liquidity;
Its geographical dispersion;
Its continuous operation: 24 hours a day except weekends, i.e., trading from 20:15 GMT on Sunday until 22:00 GMT Friday;
The variety of factors that affect exchange rates;
The low margins of relative profit compared with other markets of fixed income;
The use of leverage to enhance profit and loss margins and with respect to account size.
Definition of Stock Exchange : The securities regulation act of 1956 defined stock exchange as “an association , organization , or a individual which is established for for the purpose of assisting , regulating , and controlling business in buying ,selling and dealing in securities.”
A derivative is a financial security with a value that is reliant upon or derived from an underlying asset or group of assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its price is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes.
Derivatives can either be traded over-the-counter (OTC) or on an exchange. OTC derivatives constitute the greater proportion of derivatives in existence and are unregulated, whereas derivatives traded on exchanges are standardized. OTC derivatives generally have greater risk for the counterparty than do standardized derivatives.
Derivative is a product whose value is derived from the value of one or more basic underlying variables. Refer to the presentation for more information on derivatives.
Biological screening of herbal drugs: Introduction and Need for
Phyto-Pharmacological Screening, New Strategies for evaluating
Natural Products, In vitro evaluation techniques for Antioxidants, Antimicrobial and Anticancer drugs. In vivo evaluation techniques
for Anti-inflammatory, Antiulcer, Anticancer, Wound healing, Antidiabetic, Hepatoprotective, Cardio protective, Diuretics and
Antifertility, Toxicity studies as per OECD guidelines
June 3, 2024 Anti-Semitism Letter Sent to MIT President Kornbluth and MIT Cor...Levi Shapiro
Letter from the Congress of the United States regarding Anti-Semitism sent June 3rd to MIT President Sally Kornbluth, MIT Corp Chair, Mark Gorenberg
Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
harassment and intimidation at the Massachusetts Institute of Technology (MIT). Failing to act decisively to ensure a safe learning environment for all students would be a grave dereliction of your responsibilities as President of MIT and Chair of the MIT Corporation.
This Congress will not stand idly by and allow an environment hostile to Jewish students to persist. The House believes that your institution is in violation of Title VI of the Civil Rights Act, and the inability or
unwillingness to rectify this violation through action requires accountability.
Postsecondary education is a unique opportunity for students to learn and have their ideas and beliefs challenged. However, universities receiving hundreds of millions of federal funds annually have denied
students that opportunity and have been hijacked to become venues for the promotion of terrorism, antisemitic harassment and intimidation, unlawful encampments, and in some cases, assaults and riots.
The House of Representatives will not countenance the use of federal funds to indoctrinate students into hateful, antisemitic, anti-American supporters of terrorism. Investigations into campus antisemitism by the Committee on Education and the Workforce and the Committee on Ways and Means have been expanded into a Congress-wide probe across all relevant jurisdictions to address this national crisis. The undersigned Committees will conduct oversight into the use of federal funds at MIT and its learning environment under authorities granted to each Committee.
• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
• The Committee on Ways and Means has been investigating several universities since November 15, 2023, when the Committee held a hearing entitled From Ivory Towers to Dark Corners: Investigating the Nexus Between Antisemitism, Tax-Exempt Universities, and Terror Financing. The Committee followed the hearing with letters to those institutions on January 10, 202
Welcome to TechSoup New Member Orientation and Q&A (May 2024).pdfTechSoup
In this webinar you will learn how your organization can access TechSoup's wide variety of product discount and donation programs. From hardware to software, we'll give you a tour of the tools available to help your nonprofit with productivity, collaboration, financial management, donor tracking, security, and more.
Unit 8 - Information and Communication Technology (Paper I).pdfThiyagu K
This slides describes the basic concepts of ICT, basics of Email, Emerging Technology and Digital Initiatives in Education. This presentations aligns with the UGC Paper I syllabus.
Model Attribute Check Company Auto PropertyCeline George
In Odoo, the multi-company feature allows you to manage multiple companies within a single Odoo database instance. Each company can have its own configurations while still sharing common resources such as products, customers, and suppliers.
Acetabularia Information For Class 9 .docxvaibhavrinwa19
Acetabularia acetabulum is a single-celled green alga that in its vegetative state is morphologically differentiated into a basal rhizoid and an axially elongated stalk, which bears whorls of branching hairs. The single diploid nucleus resides in the rhizoid.
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
Synthetic Fiber Construction in lab .pptxPavel ( NSTU)
Synthetic fiber production is a fascinating and complex field that blends chemistry, engineering, and environmental science. By understanding these aspects, students can gain a comprehensive view of synthetic fiber production, its impact on society and the environment, and the potential for future innovations. Synthetic fibers play a crucial role in modern society, impacting various aspects of daily life, industry, and the environment. ynthetic fibers are integral to modern life, offering a range of benefits from cost-effectiveness and versatility to innovative applications and performance characteristics. While they pose environmental challenges, ongoing research and development aim to create more sustainable and eco-friendly alternatives. Understanding the importance of synthetic fibers helps in appreciating their role in the economy, industry, and daily life, while also emphasizing the need for sustainable practices and innovation.
1. In finance, a derivative is a contract that derives its value
from the performance of an underlying entity. This underlying
entity can be an asset, index, or interest rate, and is often
called the "underlying".
Derivatives can be used for a number of purposes, including
insuring against price movements (hedging), increasing
exposure to price movements for speculation or getting
access to otherwise hard-to-trade assets or markets.
Some of the more common derivatives
include forwards, futures, options, swaps, and variations of
these such as collateralized debt obligations, credit default
swaps, and mortgage-backed securities.
Most derivatives are traded over-the-counter (off-exchange)
or on an exchange such as the Chicago Mercantile
Exchange, while most insurance contracts have developed
into a separate industry.
Derivatives are one of the three main categories of financial
instruments, the other two being stocks (i.e., equities or
shares) and debt (i.e., bonds and mortgages).
Derivatives
2. Underlying Asset in a Derivatives Contract
As defined above, the value of a derivative instrument depends upon the
underlying asset. The underlying asset may assume many forms:
1.Commodities including grain, coffee beans, orange juice
2.Precious metals like gold and silver.
3.Foreign exchange rates or currencies.
4.Bonds of different types, including medium to long term negotiable debt
securities issued by governments, companies, etc.
5.Shares and share warrants of companies traded on recognized stock
exchanges and Stock Index.
6.Short term securities.
7.Over- the Counter (OTC) money market products such as loans or
deposits.
3. Participants in Derivatives Market
1. Hedgers: They use derivatives markets to reduce or eliminate
the risk associated with price of an asset. Majority of the
participants in derivatives market belongs to this category.
2. Speculators: They transact futures and options contracts to get
extra leverage in betting on future movements in the price of an
asset. They can increase both the potential gains and potential
losses by usage of derivatives in a speculative venture.
3. Arbitrageurs: Their behaviour is guided by the desire to take
advantage of a discrepancy between prices of more or less the
same assets or competing assets in different markets. If, for
example, they see the futures price of an asset getting out of line
with the cash price, they will take offsetting positions in the two
markets to lock in a profit.
4. Applications of Financial Derivatives
Some of the applications of financial derivatives can be enumerated as follows:
1. Management of risk: This is most important function of derivatives.Financial
derivatives provide a powerful tool for limiting risks that individuals and organizations
face in the ordinary conduct of their businesses.Effective use of derivatives can save
cost, and it can increase returns for the organisations.
2. Efficiency in trading: Financial derivatives allow for free trading of risk
components and that leads to improving market efficiency. Traders can use a
position in one or more financial derivatives as a substitute for a position in the
underlying instruments. In many instances, traders find financial derivatives to be a
more attractive instrument than the underlying security. This is mainly because of the
greater amount of liquidity in the market offered by derivatives as well as the lower
transaction costs associated with trading a financial derivative as compared to the
costs of trading the underlying instrument in cash market.
3. Speculation: This is not the only use, and probably not the most important use, of
financial derivatives.Financial derivatives are considered to be risky. If not used
properly, these can leads to financial destruction in an organisation.However, these
instruments act as a powerful instrument for knowledgeable traders to expose
themselves to calculated and well understood risks in search of a reward, that is,
profit.
5. 4. Price discover: Another important application of derivatives is the price
discovery which means revealing information about future cash market prices
through the futures market. Derivatives markets provide a mechanism by which
diverse and scattered opinions of future are collected into one readily discernible
number which provides a consensus of knowledgeable thinking.
5. Price stabilization function: Derivative market helps to keep a stabilising
influence on spot prices by reducing the short-term fluctuations. In other words,
derivative reduces both peak and depths and leads to price stabilisation effect in
the cash market for underlying asset.
6. CLASSIFICATION OF DERIVATIVES
Forward Contract
A forward contract is an agreement between two parties to buy or sell an asset at
a specified point of time in the future. In case of a forward contract the price
which is paid/ received by the parties is decided at the time of entering into
contract. It is the simplest form of derivative contract mostly entered by
individuals in day to day’s life.
Futures Contract
Futures is a standardized forward contact to buy (long) or sell (short) the
underlying asset at a specified price at a specified future date through a specified
exchange. Futures contracts are traded on exchanges that work as a buyer or
seller for the counterparty. Exchange sets the standardized terms in term of
Quality, quantity, Price quotation, Date and Delivery place (in case of
commodity).
7. Options Contract
In case of futures contact, both parties are under obligation to perform their
respective obligations out of a contract. But an options contract, as the name
suggests, is in some sense, an optional contract. An option is the right, but not the
obligation, to buy or sell something at a stated date at a stated price. A “call option”
gives one the right to buy; a “put option” gives one the right to sell. Options are the
standardized financial contract that allows the buyer (holder) of the option, i.e. the
right at the cost of option premium, not the obligation, to buy (call options) or sell
(put options) a specified asset at a set price on or before a specified date through
exchanges.
Swaps Contract
A swap can be defined as a barter or exchange. It is a contract whereby parties
agree to exchange obligations that each of them have under their respective
underlying contracts or we can say, a swap is an agreement between two or more
parties to exchange stream of cash flows over a period of time in the future. The
parties that agree to the swap are known as counter parties.
8. History of Derivatives Markets in India
Derivatives markets in India have been in existence in one form or the other for a
long time. In the area of commodities, the Bombay Cotton Trade Association
started futures trading way back in 1875. In 1952, the Government of India
banned cash settlement and options trading. Derivatives trading shifted to
informal forwards markets. In recent years, government policy has shifted in
favour of an increased role of market-based pricing and less suspicious
derivatives trading. The first step towards introduction of financial derivatives
trading in India was the promulgation of the Securities Laws (Amendment)
Ordinance, 1995. It provided for withdrawal of prohibition on options in securities.
The last decade, beginning the year 2000, saw lifting of ban on futures trading in
many commodities. Around the same period, national electronic commodity
exchanges were also set up. Derivatives trading commenced in India in June
2000 after SEBI granted the final approval to this effect in May 2001 on the
recommendation of L. C Gupta committee. Securities and Exchange Board of
India (SEBI) permitted the derivative segments of two stock exchanges, NSE
and BSE, and their clearing house/corporation to commence trading and
settlement in approved derivatives contracts.