This article is a concise form of The MBA Project – Study On Derivatives At India infoline. A derivative security is a security whose value depends on the value of together more basic underlying variable. Some of the contents of the project are written down below and you can download the entire project as well.
A derivative security is a security whose value depends on the value of together more basic underlying variable. These are also known as contingent claims. Derivatives securities have been very successful in innovation in capital markets.
The emergence of the market for derivative products most notably forwards, futures and options can be traced back to the willingness of risk-averse economic agents to guard themselves against uncertainties arising out of fluctuations in asset prices. By their very nature, financial markets are market by a very high degree of volatility. Though the use of derivative products, it is possible to partially or fully transfer price risks by locking – in asset prices. As instrument of risk management these generally don’t influence the fluctuations in the underlying asset prices.
However, by locking-in asset prices, derivative products minimize the impact of fluctuations in asset prices on the profitability and cash-flow situation of risk-averse investor.
Derivatives are risk management instruments which derives their value from an underlying asset. Underlying asset can be Bullion, Index, Share, Currency, Bonds, Interest, etc.
OBJECTIVES OF THE STUDY
- To understand the concept of the Financial Derivatives such as Futures and Options.
- To examine the advantage and the disadvantages of different strategies along with situations.
- To study the different ways of buying and selling of Options.
The study is limited to “Derivatives” With special reference to Futures in the Indian context and the IndiaInfoline has been taken as representative sample for the study.
The study cannot be said as totally perfect, any alteration may come. The study has only made humble attempt at evaluating Derivatives Markets only in Indian Context. The study is not based on the International perspective of the Derivatives Markets.