The document provides information about stock markets, stocks, stock exchanges, and derivatives markets. It discusses:
1) What a stock market and equity market are, how stocks are listed and traded on exchanges.
2) What stocks are and how companies raise money by issuing shares.
3) Details on some major Indian stock exchanges like BSE and NSE, their locations and roles.
4) Concepts related to stock trading like brokers, demat accounts, stock market crashes.
5) An overview of derivatives markets, different types of derivatives like forwards, futures, options, swaps, and assets they are based on.
A project on derivatives market in indiaProjects Kart
A project on derivatives market in India report goes beyond that the local derivative in the emerging markets have witnessed widespread use of the derivative instrument for a variety of reasons. This continuous growth and development by the emerging market participants has resulted in capital inflows as well as helped the investors in risk protection through hedging. Visit: http://www.projectskart.com/p/contact-us.html for more information.
A project on derivatives market in indiaProjects Kart
A project on derivatives market in India report goes beyond that the local derivative in the emerging markets have witnessed widespread use of the derivative instrument for a variety of reasons. This continuous growth and development by the emerging market participants has resulted in capital inflows as well as helped the investors in risk protection through hedging. Visit: http://www.projectskart.com/p/contact-us.html for more information.
In this workshop we will discuss the use of technology in the work of the humanities, also known as Digital Humanities (DH). We will discuss how faculty can us DH to archive historical documents, as well as how DH might be used to motivate students with different learning styles. For technologists, you will learn the tools many people are using to implement DH projects, and how you can help faculty think about historical data in the context of a DH project.
Professional recruitment entrepreneur Scott Robarge helps fast-growing technology companies find the skilled professionals they need for their continued success. When locating desired talent, Scott Robarge uses mobile-based technology and social media platforms such as Twitter.
Trade Nivesh Is An Investment Advisory Where We Provide Intraday And Positional Calls For Stock And Commodity Segments Take Our Trial For Earning Profit
This presentation will give a brief idea about "SHARE MARKET" & what are the various terms one must be associated with before investing in 'SHARE MARKET'A
This Presentation is about the Financial Market in India.
Aim is to provide basic information regarding Stock market, Bombay Stock Exchange(BSE) and National Stock Exchange of India (NSEI).
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
Latino Buying Power - May 2024 Presentation for Latino CaucusDanay Escanaverino
Unlock the potential of Latino Buying Power with this in-depth SlideShare presentation. Explore how the Latino consumer market is transforming the American economy, driven by their significant buying power, entrepreneurial contributions, and growing influence across various sectors.
**Key Sections Covered:**
1. **Economic Impact:** Understand the profound economic impact of Latino consumers on the U.S. economy. Discover how their increasing purchasing power is fueling growth in key industries and contributing to national economic prosperity.
2. **Buying Power:** Dive into detailed analyses of Latino buying power, including its growth trends, key drivers, and projections for the future. Learn how this influential group’s spending habits are shaping market dynamics and creating opportunities for businesses.
3. **Entrepreneurial Contributions:** Explore the entrepreneurial spirit within the Latino community. Examine how Latino-owned businesses are thriving and contributing to job creation, innovation, and economic diversification.
4. **Workforce Statistics:** Gain insights into the role of Latino workers in the American labor market. Review statistics on employment rates, occupational distribution, and the economic contributions of Latino professionals across various industries.
5. **Media Consumption:** Understand the media consumption habits of Latino audiences. Discover their preferences for digital platforms, television, radio, and social media. Learn how these consumption patterns are influencing advertising strategies and media content.
6. **Education:** Examine the educational achievements and challenges within the Latino community. Review statistics on enrollment, graduation rates, and fields of study. Understand the implications of education on economic mobility and workforce readiness.
7. **Home Ownership:** Explore trends in Latino home ownership. Understand the factors driving home buying decisions, the challenges faced by Latino homeowners, and the impact of home ownership on community stability and economic growth.
This SlideShare provides valuable insights for marketers, business owners, policymakers, and anyone interested in the economic influence of the Latino community. By understanding the various facets of Latino buying power, you can effectively engage with this dynamic and growing market segment.
Equip yourself with the knowledge to leverage Latino buying power, tap into their entrepreneurial spirit, and connect with their unique cultural and consumer preferences. Drive your business success by embracing the economic potential of Latino consumers.
**Keywords:** Latino buying power, economic impact, entrepreneurial contributions, workforce statistics, media consumption, education, home ownership, Latino market, Hispanic buying power, Latino purchasing power.
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
What website can I sell pi coins securely.DOT TECH
Currently there are no website or exchange that allow buying or selling of pi coins..
But you can still easily sell pi coins, by reselling it to exchanges/crypto whales interested in holding thousands of pi coins before the mainnet launch.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and resell to these crypto whales and holders of pi..
This is because pi network is not doing any pre-sale. The only way exchanges can get pi is by buying from miners and pi merchants stands in between the miners and the exchanges.
How can I sell my pi coins?
Selling pi coins is really easy, but first you need to migrate to mainnet wallet before you can do that. I will leave the telegram contact of my personal pi merchant to trade with.
Tele-gram.
@Pi_vendor_247
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
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how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
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what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
2. STOCK MARKET:
A stock market or equity market is a public entity for the
trading of company stock (shares) and derivatives at an
agreed price.
These are securities listed on a stock exchanges as well
as those only traded privately.
The stocks are listed and traded on stock exchanges
which are entities of a corporation or mutual
organization.
The size of the world stock market was estimated at
about $36.6 trillion at the beginning of October 2008.
3. WHAT ARE STOCKS?
At some point, just about every company needs to
raise money
In each case, they have two choices:
Borrow the money, or
Raise it from investors by selling them a stake
(issuing shares of stock) in the company
4. When you own a share of stock, you are a part
owner in the company with a claim (however
small it may be) on every asset and every penny
in earnings.
Individual stock buyers rarely think like
owners, and it's not as if they actually have a say
in how things are done. Nevertheless, it's that
ownership structure that gives a stock its value.
5. STOCK EXCHANGE:
A market in which securities are bought and sold:
"the company was floated on the Stock Exchange".
The initial offering of stocks and bonds
to investors is by definition done in the primary
market and subsequent trading is done in
the secondary market.
A stock exchange is often the most important
component of a stock market.
Supply and demand in stock markets are driven by
various factors that, as in all free markets, affect the
price of stocks.
6. ROLE OF STOCK EXCHANGE
Raising capital for business:- common forms of raising capital-
Mobilizing savings for investments.
Creating investment opportunities for small companies.
Government capital rising for development projects.
Facilitates company growth.
Going to
public
Limited
partnership
Venture
capital
Corporate
companies
7. SOME INDIAN STOCK EXCHANGES
EXCHANGE
BOMBAY STOCK EXCHANGE
NATIONAL STOCK EXCHANGE
JAIPUR STOCK EXCHANGE
UP STOCK EXCHANGE ASSOCIATION
MADRAS STOCK EXCHANGE
COCHIN STOCK EXCHANGE
BANGLORE STOCK EXCHANGE
GAUHATI STOCK EXCHANGE
LUDHIANA STOCK EXCHANGE
CALCUTTA STOCK EXCHANGE
LOCATION
MUMBAI
MUMBAI
JAIPUR
KANPUR
CHENNAI
COCHIN
BENGULURU
GAUHATHI
LUDHIANA
KOLKATA
NSE AND BSE ARE THE MAJOR STOCK EXCHANGES IN INDIA.
8. OTHER STOCK EXCHANGES
ECONOMY STOCK EXCHANGE
US & EUROPE NYSE
US & EUROPE (NORTH) NASDAQ
JAPAN TOKYO STOCK EXCHANGE
UNITED KINGDOM LONDON STOCK EXCHANGE
EUROPE EURONEXT
CHINA SHANGHAI STOCK EXCHANGE
HONG KONG HONGKONG STOCK EXCHANGE
CANADA TORONTO STOCK EXCHANGE
BRAZIL BM&F BOVESPA
9. ECONOMY STOCK EXCHANGE
AUSTRALIA AUSTRALIAN SECURITIES EXCHANGE
GERMANY DEUTSCHE BORSE
SWITZERLAND SIX SWISS EXCHANGE
CHINA SHENZHEN STOCK EXCHANGE
SPAIN BME SPANISH EXCHANGES
INDIA BOMBAY STOCK EXCHANGE
SOUTH KOREA KOREA EXCHANGE
INDIA NATIONAL STOCK EXCHNGE
RUSSIA MICEX – RTS
SOUTH AFRICA JSE LIMITED
11. BOMBAY STOCK EXCHANGE
Established in 1875, the Bombay Stock Exchange is
Asia's first stock exchange.
BSE Limited formerly known as Bombay Stock
Exchange (BSE) , is the oldest stock exchange in
Asia.
It is a stock exchange located on Dalal
Street, Mumbai.
The equity market capitalization of the companies
listed on the BSE was US$1 trillion (or Re
:5526,99,93,920.3007) as of December 2011.
It the 6th largest stock exchange in Asia and the
14th largest in the world.
12. The BSE has the largest number of listed companies in the
world.
As of March 2012, there are over 5,133 listed Indian
companies and over 8,196 scrip's on the stock exchange, the
Bombay Stock Exchange has a significant trading volume.
The BSE SENSEX, also called "BSE 30", is a widely used
market index in India and Asia.
Though many other exchanges exist, BSE and the National
Stock Exchange of India account for the majority of the
equity trading in India.
While both have similar total market capitalization (about
USD 1.6 trillion), share volume in NSE is typically two
times that of BSE.
13.
14. NATIONAL STOCK EXCHANGE
The National Stock Exchange (NSE) is stock exchange
located at Mumbai, India.
It is the 16th largest stock exchange in the world by market
capitalization and largest in India by daily turnover and
number of trades, for both equities and derivative trading.
NSE has a market capitalization of around US 985 billion
and over 1,646 listings as of December 2011.
NSE and BSE are the two most significant stock
exchanges in India, and between them are responsible for
the vast majority of share transactions.
15. The NSE's key index is the S&P CNX Nifty, known as the NSE NIFTY (National Stock
Exchange Fifty), an index of fifty major stocks weighted by market capitalisation.
NSE is mutually owned by a set of leading financial institutions, banks, insurance
companies and other financial intermediaries in India but its ownership and management
operate as separate entities.
There are at least 2 foreign investors NYSE Euro next and Goldman Sachs who have
taken a stake in the NSE.
In 2011, NSE was the third largest stock exchange in the world in terms of the number
of contracts (1221 million) traded in equity derivatives.
It is the second fastest growing stock exchange in the world with a recorded growth of
16.6%.
16. Stock trading
Stock trading is not just buying and selling stocks at the
stock market, there are so many other factors that need to
be taken care of for successful stock trading.
Anyone who invests in the stock market wishes to make
profit from the investments. To ensure that you get
significant return from your investment you have to pick
up the right stocks at the right time.
If you have decided to trade in stocks the first thing that
you need to decide is the stock market where you will
trade.
17. There are mainly two major stock exchanges in India
The Bombay Stock Exchange or BSE
The National Stock Exchange or NSE.
BSE is the largest stock exchange in the country and
it is the biggest in world in terms of number of listed
companies.
The NSE is the virtual exchange where you can only
trade online.
Both these exchanges have their benefits and
limitations.
19. Stock brokers
An agent that charges a fee or commission for executing
buy and sell orders submitted by an investor. (OR)
The firm that acts as an agent for a customer, charging the
customer a commission for its services.
You can either opt for a conventional broker or you can
choose to trade online.
If you are trading online you can get the broking service
from the banking or non banking organisations offering
online trading facilities who will provide you with the DP
account and act as your broker.
20. DEMAT Account
A demat account is opened on the same lines as that of a
Bank Account.
Prescribed Account opening forms are available with the
DP, needs to be filled in.
Standard Agreements are to be signed by the Client and
the DP.
In case of Corporate clients, additional attachments
required are - true copy of the resolution for Demat a/c
opening along with signatories to operate the account and
true copy of the Memorandum and Articles of Association
is to be attached
21. Derivatives Market in India
The derivatives market is the financial
market for derivatives, financial instruments like futures
contracts or options, which are derived from other forms
of assets.
The market can be divided into two, that for exchange-
traded derivatives and that for over-the-counter
derivatives. The legal nature of these products is very
different as well as the way they are traded, though many
market participants are active in both.
22. Why Do We Call Them Derivatives?
• They owe their existence to the presence of a market
for an underlying asset or portfolio of assets, which
may be considered as primary securities.
• Consequently such contracts are derived from these
underlying assets, and hence the name.
• Thus if there were to be no market for the underlying
assets, there would be no derivatives
23. Size of Derivatives Market
The total world derivatives market has been estimated at about
$791 trillion face or nominal value,11 times the size of the entire
world economy.
The value of the derivatives market, because it is stated in terms
of notional values, cannot be directly compared to a stock or a
fixed income security, which traditionally refers to an actual
value.
Moreover, the vast majority of derivatives 'cancel' each other out
(i.e., a derivative 'bet' on an event occurring is offset by a
comparable derivative 'bet' on the event not occurring).
Many such relatively illiquid securities are valued as marked to
model, rather than an actual market price.
26. Forward Contract
A forward contract is an agreement between two parties
that calls for the delivery of an asset on a specified future
date at a price that is negotiated at the time of entering
into the contract.
Every forward contract has a buyer and a seller.
The buyer has an obligation to pay cash and take delivery
on the future date.
The seller has an obligation to take the cash and make
delivery on the future date
27. Futures Contract
• A futures contract too is a contract that calls for the
delivery of an asset on a specified future date at a price
that is fixed at the outset.
• It too imposes an obligation on the buyer to take delivery
and on the seller to make delivery.
• Thus it is essentially similar to a forward contract.
28. Forward Contracts v/s Futures
Contracts
Forward Futures
Private contract between two parties Traded on an exchange
Not standardized Standardized
Usually one specified delivery date Range of delivery dates
Settled at end of contract Settled daily
Delivery or final settlement usual Usually closed out prior to maturity
Some credit risk Virtually no credit risk
2.28
29. Options
An options contract gives the buyer the right to transact on or
before a future date at a price that is fixed at the outset.
It imposes an obligation on the seller of the contract to transact
as per the agreed upon terms, if the buyer of the contract were
to exercise his right.
We have said that an option holder acquires a right to transact.
There are two possible transactions from an investor’s
standpoint – purchases and sales.
Consequently there are two types of options – Calls and Puts.
30. …..Continue
A Call Option gives the holder the right to acquire the
asset.
A Put Option gives the holder the right to sell the asset.
If a call holder were to exercise his right, the seller of the
call would have to make delivery of the asset.
If the holder of a put were to exercise his right, the seller
of the put would have to accept delivery.
We have said that an option holder has the right to transact
on or before a certain specified date.
31. ……Continue
Certain options permit the holder to exercise his right
only on a future date. These are known as European
Options.
Other types of options permit the holder to exercise
his right at any point in time on or before a specified
future date.
These are known as American Options.
32. Rights
What is the difference between a Right and an Obligation.
An Obligation is a binding commitment to perform.
A Right however, gives the freedom to perform if desired.
It need be exercised only if the holder wishes to do so.
In a transaction to trade an asset at a future date, both
parties cannot be given rights.
For, if it is in the interest of one party to go through with
the transaction when the time comes, it obviously will not
be in the interest of the other.
33. …….Continue
Consequently while obligations can be imposed on
both the parties to the contract, like in the case of a
forward or a futures contract, a right can be given to
only one of the two parties.
Hence, while a buyer of an option acquires a right, the
seller has an obligation to perform imposed on him.
34. •Longs & Shorts
The buyer of a forward, futures, or options contract is
known as the Long.
He is said to have taken a Long Position.
The seller of a forward, futures, or options contract, is
known as the Short.
He is said to have taken a Short Position.
In the case of options, a Short is also known as the
option Writer.
35. Comparison of Futures/Forwards
versus Options
Instrument Nature of
Long’s
Commitment
Nature of
Short’s
Commitment
Forward/Futures
Contract
Obligation to buy Obligation to sell
Call Options Right to buy Obligation to sell
Put Options Right to sell Obligation to buy
36. Swaps
A swap is a contractual agreement between two
parties to exchange specified cash flows at pre-
defined points in time.
There are two broad categories of swaps –
Interest Rate Swaps
Currency Swaps
37. •Interest Rate Swaps
In the case of these contracts, the cash flows being
exchanged, represent interest payments on a specified
principal, which are computed using two different parameters.
For instance one interest payment may be computed using a
fixed rate of interest, while the other may be based on a
variable rate such as LIBOR.
There are also swaps where both the interest payments are
computed using two different variable rates – For instance one
may be based on the LIBOR and the other on the Prime Rate of
a country.
Obviously a fixed-fixed swap will not make sense.
38. ……..Continue
Since both the interest payments are denominated in
the same currency, the actual principal is not
exchanged.
Consequently the principal is known as a notional
principal.
Also, once the interest due from one party to the other
is calculated, only the difference or the net amount is
exchanged.
39. •Currency Swaps
These are also known as cross-currency swaps.
In this case the two parties first exchange principal amounts
denominated in two different currencies.
Each party will then compute interest on the amount received
by it as per a pre-defined yardstick, and exchange it
periodically.
At the termination of the swap the principal amounts will be
swapped back.
In this case, since the payments being exchanged are
denominated in two different currencies, we can have fixed-
floating, floating-floating, as well as fixed-fixed swaps.
40. Assets Underlying Futures
Contracts
Till about two decades ago most of the action was in futures
contracts on commodities.
But nowadays most of the action is in financial futures.
Among commodities, we have contracts on agricultural
commodities, livestock and meat, food and
fibre, metals, lumber, and petroleum products.
Historically most of the action has been in stock options.
Commodity options do exist but do not trade in the same
volumes as commodity futures.
Options on foreign currencies, stock indices, and interest rates
are also available.
41. •Mechanics of Future
A future contract is a contract for delivery of a standard
package of a standard commodity or financial instrument at a
specific date and place in future but at a price that is agreed
when the contract is taken out.
The future price = Spot price + cost carrying
Cost of carrying includes:
Storage
Insurance
Transport cost
Finance cost
45. Margin:
A margin is cash or marketable securities
deposited by an investor with his or her broker.
The balance in the margin account is adjusted
to reflect daily settlement.
Margins minimize the possibility of a loss
through a default on a contract.
46.
47. Example of a Futures Trade
An investor takes a long position in 2nd December gold
futures contracts on June 5th
contract size is 100 oz.
futures price is US$400
margin requirement is US $2,000/contract (US$4,000 in
total)
maintenance margin is US $1,500/contract (US$3,000 in
total)
2
.
4
7
49. Other Key Points About Futures
They are settled daily.
Closing out a futures position involves
entering into an offsetting trade.
Most contracts are closed out before
maturity.
2.49
50. Collateralization in OTC Markets
It is becoming increasingly common for
contracts to be collateralized in OTC markets
They are then similar to futures contracts in
that they are settled regularly (e.g. every day or
every week)
2.
50
51. •Delivery
If a futures contract is not closed out before
maturity, it is usually settled by delivering the assets
underlying the contract. When there are alternatives
about what is delivered, where it is delivered, and
when it is delivered, the party with the short position
chooses.
A few contracts (for example, those on stock indices
and Eurodollars) are settled in cash .
2.
51
52. Some Important Terminology
Open interest: the total number of contracts
outstanding equal to number of long positions or number
of short positions.
Settlement price: the price just before the final bell
each day used for the daily settlement process.
Volume of trading: the number of trades in 1 day
2
.
5
2
53. Convergence of Futures to Spot
2
.
5
3
Time Time
(a) (b)
Futures
Price
Futures
Price
Spot Price
Spot Price
54. Regulation of Futures
Regulation is designed to protect the public interest.
Regulators try to prevent questionable trading
practices by either individuals on the floor of the
exchange or outside groups.
2
.
5
4
55. •Accounting & Tax
It is logical to recognize hedging profits (losses) at
the same time as the losses (profits) on the item
being hedged.
It is logical to recognize profits and losses from
speculation on a mark to market basis.
Roughly speaking, this is what the accounting and
tax treatment of futures in the U.S. and many other
countries attempts to achieve.
55
56. Forward Contract
A forward contract is an OTC agreement to buy
or sell an asset at a certain time in the future for
a certain price
There is no daily settlement (unless a
collateralization agreement requires it). At the
end of the life of the contract one party buys the
asset for the agreed price from the other party
6
57. Profit from a Long Forward
or Futures Position
2.57
Profit
Price of Underlying
at Maturity
58. Profit from a Short Forward or
Futures Position
2.58
Profit
Price of Underlying
at Maturity
64. Average Returns
Investment Average Return
Large stocks 12.4%
Small Stocks 17.5%
Long-term Corporate Bonds 6.2%
Long-term Government Bonds 5.8%
Treasury Bills 3.8%
1
2
-
6
65. Average Annual Returns and Risk Premium
Investment Average Return Risk Premium
Large stocks 12.4% 8.6%
Small Stocks 17.5% 13.7%
Long-term Corporate
Bonds
6.2% 2.4%
Long-term
Government Bonds
5.8% 2.0%
Treasury Bills 3.8% 0.0%
5
66. Regulatory Framework
Securities Contracts (Regulation) Act, 1956
Securities and Exchange Board of India Act, 1992
SEBI (Intermediaries) Regulations Act, 2008
SEBI (Prohibition of Insider Trading) Regulations
Act, 1992
SEBI (Prohibition of fraudulent and Unfair Trade
Practices relating to securities market) Regulations
Act, 2003
The Depositories Act, 1996
Indian Contract Act, 1872
Income Tax Act, 1961
The Prevention of Money Laundering Act, 2002
67. Conclusion
Stock Market and Derivative Market is an important topic
in the world of Finance. While most financiers believe the
markets are neither 100% efficient, nor 100%
inefficient, many disagree where on the efficiency line the
world's markets fall.
It can be concluded that in reality a financial market can’t be
considered to be extremely efficient, or completely
inefficient.
The financial markets are a mixture of both, sometimes the
market will provide fair returns on the investment for
everyone, while at other times certain investors will generate
above average returns on their investment.
68. ……Continue
Derivatives are among the forefront of the
innovations in the financial markets and aim to
increase returns and reduce risk.
They provide an outlet for investors to protect
themselves from the unpredictable occurrence of
the financial markets.
These instruments are very popular with investors
not only in India, but in all over the world.