Financial Derivatives & Placement Counselling by Dr. K. BHANU PRAKASH

8/11/2019 Financial Derivatives & Placement Counselling by Dr. K. BHANU PRAKASH

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A derivative is a contract between two

parties which derives its value/price

from an underlying asset. The most

common types of derivatives are futures,

options, forwards and swaps. Generally

stocks, bonds, currency, commodities

and interest rates form the underlying

asset.


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Learning Objectives


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FuturesA Futures Contract can be defined as an

agreement to buy / sell a standard quantity of a

specific instrument at a predetermined future

dateand at a price agreed between the parties

through open outcry on the floor of an organised

futures exchange.


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Currency Interest Rate Index CommodityIndividual

Stock


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An Option is a contract in which the seller of the

contract grants the Buyer the right to purchase

from the Seller (Writer) a designated instrument

or an asset at a specific price which is agreed upon

at the time of entering into the contract.

Buyer has a right but not an obligation to buy or

sell.


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Call Option

Put Option

American Option

European Option


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FORWARDS

A Forward Contract is a simple

derivative. It is an agreement to buy or

sell an asset at a certain future time for a

certain price. It is transacted in OTC.


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FORWARDS LONG POSITION

One of the parties to a Forward Contract

assumed a long-position and agrees to buy

the underlying asset on a certain specified

future date for a certain specified price.


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FORWARDS SHORT POSITION

The Other Party assumes short-position

and agrees to sell the underlying asset on

the same date for the same price.The Specified Price in the Forward Contract

will be referred to as the Delivery Price.


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FORWARDS NUTSHELL

The Forward Contract has to be executed by

both the parties on the Due Date (or Specified

Maturity Date) by delivery of the asset by the

Seller and by payment of money (the Delivery

Price) by the Buyer, to each other.


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SWAPS

It refers to simultaneous purchase &sale of currency for different maturities

or vice versa.

It is the agreed exchange of future cash

flows with or without exchange of cash

flows at present


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Interest Rate SWAPS

Commodity SWAPS

Equity SWAPS

Currency SWAPS


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Placement Counselling


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How Important is your job to

your overall happiness?

A) Very important, my work is my happiness65

B) Work is a priority but not equal to happiness 17

C) I try not to let work define my happiness 4

D) I work to live not live to work14


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Why do you want an MBA?

A) To be a successful entrepreneur75

B) To get into the Corporate 25

C) For employability65

D) No aspirations35


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Dr. K. BHANU PRAKASHM.Com.,M.Phil.,D.C.A., Ph.D.

Associate ProfessorSAP FI/CO ConsultantTraining & Placement Officer

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Financial Derivatives & Placement Counselling by Dr. K. BHANU PRAKASH

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