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A study on the role of derivatives and investors perceptions on it

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documents in English
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indian project
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55 pages
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  1. Introduction
  2. Objectives
  3. Research methodology
  4. Limitations
  5. Industrial profile
    1. Indian stock market overview
    2. Trading method
    3. Trading on securities
    4. Introduction to online trading
    5. Stock trading online
  6. Company profile
    1. About IL&FS Investsmart Online ltd
    2. Financial performance
    3. Organization structure
    4. IL&FS group business
    5. IL&FS depository services
  7. Products profile of IL&FS Investsmart
  8. Questionnaire
  9. Conclusion
  10. Bibliography

A derivative is a generic term for specific types of investments from which payoffs over time are derived from the performance of assets (such as commodities, shares or bonds), interest rates, exchange rates, or indices (such as a stock market index, etc). This performance can determine both the amount and the timing of the payoffs. The diverse range of potential underlying assets and payoff alternatives leads to a huge range of derivatives contracts available to be traded in the market. Today there many instruments available in the market which always optimize risk and tries give high returns and derivatives are which are gearing more attentions. The main types of derivatives are futures, forwards, options and swaps. There is tremendous growth in the use derivatives have found in the recent years; it is more than the equity segment because it is features, which help in hedging the risk. The growth in derivative has run in parallel with the increasing direct reliance of the companies on the capital for the long ?term sources funds. Emerging in the 1970s, derivatives markets grew from strength to strength. The trading volumes nearly doubled in every three years. They become so ubiquitous that, now, one cannot think of the existence of financial markets without Derivatives.

[...] Derivatives are specialized contracts, which are employed for a variety of purposes including reduction of funding costs by borrowers enhancing the yield on assets modifying the payment structure of asset to correspond investors market view etc however the most important use of derivatives is in transferring market risk called hedging which is a protection against losses resulting from unforeseen price are volatility changes. Types of Derivatives The most commonly used Derivative contracts are forwards, futures and options. Here a brief note about various Derivative contracts that have come to be used are given - Forwards: A forward contract is a customized contract between two entities, where settlement takes place on a specific date in the future at today's pre-agreed price. [...]


[...] If the portfolio is not performing well investors can get advice on restructuring it Best prices: Online trading has resulted in a phenomenal reduction in the transaction cost for the investor as online trading ensures a matching of buying and selling orders within an ENC without the intervention of market markets or traditional stock exchanges Liquidity: The liquidity option available for investors has been considerably stretched as the online trading offers 24 hours trading facilities Audit trial: Online trading has imparted greater transparency which is subject to scrutiny, by providing an audit trial for an investor right at his desk, which earlier, used to stop at his brokers trading terminal. [...]


[...] Analysis the investor preference on derivatives This chapter deals with analysis of investor preference on derivatives, the data was collected using questionnaire prepared and it consist of following 1. The no of investors trading in derivatives market The reason for trading in cash market 3. The reason for trading in derivative The reason for not investing in derivative market Since how many years investors is investing in derivative market and cash market 6. analyzing derivatives as hedging instrument 7. knowing the importance retail investors 8. [...]

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