...A PROJECT REPORT ON “Analysis of derivative segment (Future & Options Market) of capital market” SUBMITTED BY: RAVINDER SINGH NEGI NRS/011304 In the partial fulfillment of the requirement as per THE INSTITUTE OF COST AND WORKS ACCOUTANT OF INDIA Institute of Cost and Works accountant of India Delhi Office 3, Institutional Area Lodhi Road, New Delhi - 110003 Phones: 011-24622156, 24521492 Fax: 011-43583642, 24622156, 24618645 DECLARATION I hereby declare that the Project report has been prepared by me during the year 2011. In partial fulfillment of the requirement for the award of the degree of Institute of Cost and Works Accountant of India (NIRC). Ravinder Singh Negi Place:--New Delhi Date:--...
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...2 3 4 5 6 7 8 9 10 11 12 13 Title INTRODUCTION HISTORY OF FOREIGN EXCHANGE MARKETS MARKET SIZE AND LIQUIDITY MARKET PARTICIPANTS KINDS OF FX TRANSACTIONS COMPONENTS OF FX TRADING EXCHANGE RATES AND ITS USES GLOBAL LINKAGE OF FOREIGN EXCHANGE MARKETS FACTORS THAT AFFECT FOREIGN EXCHANGE MARKET TRENDS DIFFERENT EXCHANGE SYSTEMS WHICH LINKS THE FOREX MARKET GLOBALLY BASIS OF COMMUNICATION FOR INTERNATIONAL TRANSFERS CONCLUSION BIBLOGRAPHY Page no. 7 9 11 12 14 16 22 25 35 37 39 40 42 5 GLOBAL LINKAGE OF FOREIGN EXCHANGE MARKETS 6 Introduction The foreign exchange market is the biggest financial market in the world. Every day, transactions worth about 3.98 trillion dollars are carried out within the market. The major aim of introducing the foreign exchange market is to facilitate international trade by enabling businesses to perform transactions outside their local currency. The market operates round the clock from Monday through Friday. Foreign Exchange is the simultaneous Buying of one currency and paying for it with another at an agreed price (exchange rate) for settlement on an agreed date. FOREX is an acronym for FOReign Exchange. In the foreign exchange market today, a trader can purchase some amount of international currencies by paying with a different currency. This type of foreign exchange market started to develop in the 1970s, which was about thirty years after foreign exchange was introduced. Some important features about the FX market include the...
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...1.0 Introduction: The spectrum of competition ranges from perfectly competitive markets where there are many sellers who are price takers to a pure monopoly where one single supplier dominates an industry and sets price. We start our analysis of market structures by looking at perfect competition. Firms operate within their market, which consists of: Supply side: all of the firms producing similar products Demand side: all buyers willing to purchase the products Markets differ; the auto market is far different from the tomato market, for example. Thus economists separate markets into 4 categories: perfect competition, monopolistic competition, oligopoly, and monopoly. Perfect competition: There are many, many small sellers (technically, there must be an infinite number of sellers), each of whom produces an identical product. It is very easy for new sellers to enter this market, and it is easy for existing sellers to leave the market. Examples: There are no real world examples of perfectly competitive markets. The stock market comes close. 2.0 Analysis 2.1 Perfect competition Perfect competition describes a market structure whose assumptions are extremely strong and highly unlikely to exist in most real-time and real-world markets. The reality is that most markets are imperfectly competitive. Nonetheless, there is some value in understanding how price, output and equilibrium is established in both the short and the long run in a market that holds true...
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...-pit trading: floor-based trading, very physical activity. -offsetting, is the same as selling a previously purchased stock or buying back a stock to close a short position. futures contracts are fungible: any futures contract can be offset by an equivalent futures contract . Fungibility is assured by the clearinghouse that inserts itself in the middle of each contract and, therefore, becomes the counterparty to each party. -margin: long or short position in a futures, deposit sufficient funds in a margin account. -In the stock market, "margin" means that a loan is made. The loan enables the investor to reduce the amount of his own money required to purchase the securities, thereby generating leverage or gearing. -In the futures market, by contrast, margin is the amount of money that must be put into an account by a party opening up a futures position. When a transaction is initiated, a futures trader puts up a certain amount of money to meet the initial margin requirement; how ever, the remaining money is not borrowed. The amount of money deposited is more like a down payment for the commitment to purchase the underlying at a later date. Alternatively, one can view this deposit as a form of good faith money, collateral, or a performance bond: The money helps ensure that the party fulfills his or her obligation.' -margin requirements stock: are set by federal regula tors. -In futures markets, margin requirements are set...
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...ideology was implemented in different countries and nations the reality has shown it might be very far from being perfect. This system of government as well as economy is also based on trying to create equality. Communism can be related to Socialism which creates equality by essentially sharing all profits and land with the community. Unlike socialism however,Communism believes that there is no need for a profit to be given to the worker or for land to be owned by any workers because it creates inequality and this must be done to ensure social order. A Lot of the communist ideology is totally opposite and against capitalist views. There is no competition in communism and wages and salaries are equal across all carers and work. In Communist theory, government leaders should only be temporary and used only to gear the population towards true order and then step down and let the work cycle continued. Many of the communist ideology is predominantly theory and is highly criticized by many nations. In today's day and age many countries have decided to opt out of the communist social structure because it is unpractical and does not provide true equality as theorized. Communism was a fairly modern ideology founded only about 120 years ago but has lingered throughout history. The majour man honoured with the creation of communism is Karl Marx who lived between 1818-1883 and was born in Germany but then fled to the United Kingdom. Marx was a major activist during the time period he lived...
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...small firm that specializes in option trading. Employing 35 people, SCO is located on LaSalle Street in the Chicago financial district. It is a member firm of the Chicago Board Options Exchange (CBOE), where it trades options on stocks and stock indices. It is also a member firm of the Chicago Mercantile Exchange Group (CME Group), where it trades options on futures and the underlying futures contracts. SCO trades for itself and a number of corporate and individual clients. In addition, it provides general advice to other clients who trade for themselves. SCO was founded in 1975, two years after the CBOE opened. It was very successful for its first 25 years, but its profits have declined steadily since 2000. SCO's founder and principal owner, Joseph Jensen, is 67 years old and has been a life-long student of the stock market. Jensen has traded since he was a teenager. By the age of 30 he was a millionaire and an acknowledged expert on analyzing market trends. Throughout his career Jensen has relied primarily on technical analysis, the evaluation of trends in past market data such as prices and volumes. He has consistently devised option strategies to take advantage of his stock market forecasts. Over the last several years, however, his techniques have grown less profitable. Jensen attributes his declining success to the growing competitiveness of the options market, which has made it increasingly difficult for SCO to implement its trading strategies at attractive prices. ...
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...small firm that specializes in option trading. Employing 35 people, SCO is located on LaSalle Street in the Chicago financial district. It is a member firm of the Chicago Board Options Exchange (CBOE), where it trades options on stocks and stock indices. It is also a member firm of the Chicago Mercantile Exchange Group (CME Group), where it trades options on futures and the underlying futures contracts. SCO trades for itself and a number of corporate and individual clients. In addition, it provides general advice to other clients who trade for themselves. SCO was founded in 1975, two years after the CBOE opened. It was very successful for its first 25 years, but its profits have declined steadily since 2000. SCO's founder and principal owner, Joseph Jensen, is 67 years old and has been a life-long student of the stock market. Jensen has traded since he was a teenager. By the age of 30 he was a millionaire and an acknowledged expert on analyzing market trends. Throughout his career Jensen has relied primarily on technical analysis, the evaluation of trends in past market data such as prices and volumes. He has consistently devised option strategies to take advantage of his stock market forecasts. Over the last several years, however, his techniques have grown less profitable. Jensen attributes his declining success to the growing competitiveness of the options market, which has made it increasingly difficult for SCO to implement its trading strategies at attractive prices. Worried...
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...[pic] CHAPTER – I GRAND PROJECT ON CURRENCY DERIVATIVES NANCY SHAH – PROJECT TRAINEE CHAPTER 2 INTRODUCTION TO CURRENCY MARKETS 2.1 BASIC FOREIGN EXCHANGE DEFINITIONS Spot: Foreign exchange spot trading is buying one currency with a different currency for immediate delivery. The standard settlement convention for Foreign Exchange Spot trades is T+2 days, i.e., two business days from the date of trade. Forward Outright: A foreign exchange forward is a contract between two counterparties to exchange one currency for another on any day after spot. In this transaction, money does not actually change hands until some agreed upon future date. The duration of the trade can be a few days, months or years. For most major currencies, three business days or more after deal date would constitute a forward transaction Base Currency / Terms Currency: In foreign exchange markets, the base currency is the first currency in a currency pair. The second currency is called as the terms currency. Exchange rates are quoted in per unit of the base currency. E.g. The expression US Dollar–Rupee, tells you that the US Dollar is being quoted in terms of the Rupee. The US Dollar is the base currency and the Rupee is the terms currency. Exchange rates are constantly changing, which means that the value of one currency in terms of the other is constantly in flux. Changes in rates are expressed as strengthening or weakening of one currency vis-à-vis the other currency...
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...like to express our thanks towards other staff members of SNR Securities & Finance who inspired us to put in our best efforts for the completion of the project. PREFACE Financial system is the mirror reflection of an economy. The performance of any economy to a large extent is dependent on the performance of the Financial Institution. Financial system plays an important role by mobilizing saving and allocating them to the most profitable activities, and enables society to make more productive use of its scarce resources. The Financial system consist of many institution, instruments, and markets. Financial Institution range from moneylender to banks, pension funds, insurance companies brokerage house, investment trust and stock exchange. Financial markets are, by nature, extremely volatile and hence the risk factor is an important concern for financial agents. To reduce this risk, the concept of derivatives comes into the picture. Derivative securities provide them a valuable set of tools for managing this risk. Derivative securities have penetrated the Indian...
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...Evaluation of Financial Performance Financial Analysis - The process of evaluating businesses, projects, budgets and other finance-related entities to determine their suitability for investment. Typically, financial analysis is used to analyze whether an entity is stable, solvent, liquid, or profitable enough to be invested in. When looking at a specific company, the financial analyst will often focus on the income statement, balance sheet, and cash flow statement. In addition, one key area of financial analysis involves extrapolating the company's past performance into an estimate of the company's future performance. Financial ratios are tools used to analyze financial conditions and performance. Financial analysis means different things to different people.Trade creditors are primarily interested in the liquidity of the firm being analyzed. Their claims are short term and the ability of the firm to pay these can best be judged by an analysis of its liquidity. On the other hands, the claims of bondholders are long term. They are interested in the cash flow of the firm to service debts over a long period of time. The bondholders may evaluate this by analyzing the capital structures of the firm, the major sources and users of fund, the firms’ profitability. Five Different groups of ratios have been developed: * Liquidity ratios - A class of financial metrics that is used to determine a company's ability to pay off its short-terms debts obligations. Generally, the higher...
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...these companies reflect how well they are doing with in that particular market. Thus giving the investor an over all view of how their company is performing on a finical standpoint nationwide for companies such as AT&T, Verizon, Sprint, & SunCom. In order to have a clear understanding, we will look at four companies and where they stand on the finical standpoint. AT&T is one of the largest cellular companies advertising the “The Largest digital and data network” reassuring their market that they are getting the best service with the “Fewest dropped calls”. AT&T, Inc. provides telecommunication services and products to residential, business, & governmental customers in the United States and internationally. Its services include local exchange services, long-distance services, wireless communications, data/broadband & Internet services, managed networking, wholesale services, directory advertising and...
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...organization called Royal Friesland Campina. With this organization we will only be looking at the financial statements for Dutch Lady. By taking two dairy organizations that are small parts of larger corporations, it might seem to make the companies appear to be more of an "apples to apples" comparison. The two companies that we are looking at in 2009 are both publicly traded on the stock market. Dean Foods can be found on the New York Stock Exchange, while Dutch Lady would be found on Bursa Malaysia, the local stock exchange in Malaysia. (www.dutchlady.com.my) As we look at the stock market data from 2009, we learn some interesting facts about both of these companies. If one examines the past five years for both companies on this stock market, it is easy to get a good look at how they fared in 2009. According to this data, Dutch Lady had a very rough time on the exchange in the beginning of 2009. Looking closely, we can see that going into the second quarter of the exchange the company began to increase in its exchange value. Dutch Lady started...
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...In addition, with the sustainable growth of the GDP and the simple tax system with its low tax rate which made it an attractive place for investment. However, the highly polluted environment and the over-heated real estate would be a big concern for Hong Kong government. In addition, the dependence on land sales revenue should have to reduce if Hong Kong government wants to achieve a long- term fiscal sustainability. The table below clarifies that different level and different type of risk shown from this evaluation and analysis report, reveals that overall risk are in the low level of risk, except for the real-estate and environment risk. Therefore, Australian investor should expected the business operate in Hong Kong would be fairly and equally treated. However, due to the culture difference, that although Hong Kong is a mixed in high and low context culture compare to China and Japan, the minor culture barrier still remain. | |Type of risk |Level of risk | |Factors |- Political system |Low | | |- Legal system |Low | | |- Economic system |Low | | ...
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...system of checks and balances in place. The current population of the UK is 64.1 million. The UK was one of the largest macroeconomics in the world. It was seen to be one of the strongest and most stable economies before 2007, however post 2008 economic deceleration began and the GDP growth rate fell to 0.7%. In 2008, the economy entered into a recession, with a predicted negative growth rate of -4.5% for the following year. (Data monitor Statistics) The current conservative government’s main economic aims are Economic growth with more goods and services produced in the economy, alongside low inflation, little unemployment with a Fair distribution of income. (HM Treasury) Taxation comes in two forms direct taxation (taxation on income and profits) and indirect taxation this is taxation on expenditure (VAT, excise duty). The UK government spends in the region of £400bn a year. Over a third of this money goes in welfare benefits such as pensions, unemployment benefit and other forms of income support. The rest is spent on health, education, defence, roads, law and order and on supporting businesses and local communities. (Data Monitor Statistics) Businesses can benefit direct or indirectly...
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...have changed within financial markets and institutions. Many years ago, even BC, there were banking institutions available. Transactions were very informal in the early years to extremely formal in the present day. Financial Markets and Institutions have progressed considerably in the last 50 years. More opportunities of different types have evolved and are available for us to become involved in. Opportunities to invest, save and acquire loans have progressed considerably in financial markets and institutions. What are financial institutions? The two types of financial institutions are the depository financial institution and the non-depository institution. A depository institution is an organization, which may be either for-profit or non-profit, that takes money from clients and places it in any of a variety of investment vehicles for the benefit of both the client and the organization. Common examples of depository institutions are retail banks and savings and loan associations, both of which take deposits into safekeeping and use them to make loans to other customers. A non-depository institution is a government or private organization (such as building society, insurance company, investment trust, or mutual fund or unit trust) that serves as an intermediary between savers and borrowers, but does not accept time deposits. Such institutions fund their lending activities either by selling securities (bonds, notes, stock/shares) or insurance policies to the public. Their...
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