What are currency derivatives?
Currency derivatives are exchange-based futures and options contracts that allow those with a significant exposure to imports or exports, use these contracts to hedge against their exposure to a certain currency. In India, one can use such derivative contracts to hedge against currencies like US Dollar, Euro, U.K. Pound and Yen so as to manage…
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Who are the Users of Derivatives?
Derivatives are financial instruments whose value is derived from an underlying asset or a group of assets. These assets range from stocks, bonds, commodities, currencies, interest rates, or market indices. The derivatives market is a financial marketplace where derivative contracts are bought and sold. Major Users of Derivatives Financial derivatives are used for several purposes,…
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SWAP transactions in capital and Forex Market
A swap is a derivative contract where two parties agree to exchange cash flows or liabilities from different financial instruments over a set period of time. In the other words, a ‘Swap’ is an act of exchanging one thing for another. In derivative market, currencies swap, interest rates swap or commodities swaps are most common. The…
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How to transfer money abroad from NRO a/c and the sale of property in India
(Look here for repatriation of money abroad from the Sale of property purchased from funds remitted from overseas OR NRE/ FCNR accounts, Sale of property purchased from Rupee Source (while resident in India), Sale of property acquired through inheritance, etc, and permissible sources of funds for an online/offline transfer abroad from an NRO Account .)…
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Difference between forward contract and futures contract explained
A forward contract is an agreement between two parties to buy or to sell an asset at a specified price on a future date. For example, in foreign exchange market ‘forward contract’ means an exchange agreement between two parties to deliver one currency in exchange for another currency at a forward or future date. Futures…
What is derivative?
In a layman’s language, derivative means profit or loss derived from something. The most common derivative instruments used in financial markets are the forward contract, options, forward rate agreement, futures contract, interest rate swaps etc. The characteristic and value of these derivative instruments are derived from underlying assets like currencies, Interest rates, stocks indices, precious…
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