USE OF FUTURES MARKET RY INDEX FUNDS Futures markets can be used for creating synthetic index funds. Synthetic index funds created using futures contracts have advantages of simplicity and low costs. The simplicity stems from the fact that index futures…
INDEX DERIVATIVES Index derivatives are derivative contracts which have the index as the underlying. The most popular index derivatives contracts the world over are index futures and index options. NSE’s market index, the S&P CNX NIFTY was scientifically designed to…
The S&P CNX Nifty is an market capitalisation index based upon solid economic research. It was designed not only as a barometer of market movement but also to be a foundation of the new world of financial products based on…
Most of the commonly followed stock market indexes are of the following two types: Market capitalization weighted index or price weighted index. In a market capitalization weighted index, each stock in the index affects the index value in proportion to the…
ECONOMIC SIGNIFICANCE OF INDEX MOVEMENTS How do we interpret index movements? What do these movements mean? They reflect the changing expectations of the stock market about future dividends of the corporate sector. The inde.’S goes up if the stock market…
Derivatives have probably been around for as long as people have been trading with one another. Forward contracting dates back at least to the 12th century, and may well have been around before then. Merchants entered into contracts with one…
Inspite of the fear and criticism with which the derivatives markets are commonly looked at. these markets perform a number of economic functions. Princes in an organized derivatives market reflect the perfection of market participants about the future and lead…
Derivative contracts have several variants. The most common variants are forwards, futures, options and swaps. We take a brief look at various derivatives contracts that have come to be used. FORWARDS: A forward contract is a customized contract between two…
Over the last three decades, the derivatives market has seen a phenomenal growth. A large variety of derivative contracts have been launched at exchanges across the world. Some of the factors driving the growth of financial derivatives are: Increased volatility…
Derivatives is a product whose value is derived from the value of one or more basic variables, called bases (underlying asset, index, or reference rate), in a contractual manner. The underlying asset can be equity, forex, commodity or any other…