Speculation and Arbitrage in Currency Futures
by Speculation: Future contracts are extremely attractive for speculators as they provide tremendous leverage. By paying a small margin amount, speculators can take higher exposure of …
Category: Management Notes
Management Notes of Various Universities across india
Cost of Carry Model
This model assumes that arbitrage between the cash market and the futures market eliminates all imperfections in pricing, i.e., unaccounted for differences between the cash …
Application of Market Index
People from many walks of life use and are affected by market indexes. Economists and statisticians use stock-market indexes to study long-term growth patterns in …
Index Futures in The Stock Market
A contract for stock index futures is based on the level of a particular stock index such as the S&P 500 or the Dow Jones Industrial Average. …
Financial Swaps
In finance, a SWAP is a derivative in which two counterparties agree to exchange one stream of cash flow against another stream. These streams are called the …
Managing Interest Rate Exposure
Interest rate risk is the risk where changes in market interest rates might adversely affect a bank’s financial condition. The management of Interest Rate Risk …
Interest Rate Swaps
An interest rate swap is a type of a derivative contract through which two counterparties agree to exchange one stream of future interest payments for …
Currency Swaps, Interest Rate Futures
Currency Swaps A currency swap is a “contract to exchange at an agreed future date principal amounts in two different currencies at a conversion rate agreed …
Forward Rate Agreement
A Forward Rate Agreement, or FRA, is an agreement between two parties who want to protect themselves against future movements in interest rates. By entering into an …
Introduction to Derivatives Market: Definition
A derivative is a financial instrument whose value depends on underlying assets. The underlying assets could be prices of traded securities of gold, copper, aluminum …
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