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1. Discuss the role of Securities and Exchange Board of India (SEBI) in regulating the Financial markets in India. Also briefly explain the major achievements of SEBI since its inception.

2. What is a 'financial market' ? Discuss the components of Indian Financial Markets and

explain how are they interlinked with each other ?

3. What is meant by Book Building process of Public Issues ? What are the different steps involved in the issuance of equity shares through this process ? Discuss its advantages also.

4.Explain the process of order execution in a stock exchange. Discuss the different types of order execution followed in Stock Exchanges in India.

5.What is meant by dematerialisation of securities ? Explain the process of dematerialisation of securities and the benefits of the 'Depository System'.

6.What are 'Generally Accepted Accounting Principles (GAAP) ? Identify the major internationally accepted principles for accounting norms. Briefly, discuss the institutions and organisations which are associated with the development of the Indian GAAP.

7.What do you mean by 'Fundamental Equity Valuation' ? Explain briefly the Discounted Cash Flow techniques used in such valuation.

8. What is the importance of an investment philosophy ? Discuss different investment styles that are adopted by the investors while investing in stock market.

9.Describe the types of derivatives. Discuss the features of OTC derivatives markets. What are the uses of these derivatives ?

10. What are swaps ? Differentiate between different types of swaps with the help of suitable examples.

11. What are call and put options ? Illustrate with an example. Discuss the different factors which determine the movement of option prices.

12. What is the need and purpose of hedging ? Explain the different types of option strategies for hedging.

13. What is a Commodity Derivatives Exchange ? Describe briefly the different commodityderivatives Exchanges in Asia.

14.Discuss briefly various types of orders placed by exchange members based on price related conditions and time related conditions in a commodity exchange.

15. What are the basic characteristics that have to be met by an article or a product in order to qualify as a commodity for future trading ? Discuss the various benefits of trading in commodityderivatives.

16. Briefly discuss the different base metals in the world. What are the factors that impact the prices of base metals ?

17.Explain the structure of sugar industry in India and discuss the importance of sugar as a major agricultural commodity.

18.. Explain the following with suitable examples :

Contango and Backwardation

Basis and Basis risk

19. What do you mean by 'Arbitrage' ? Explain the concepts of cash and carry Arbitrage and Reverse cash and carry Arbitrage with the help of examples.

20. Why are 'Warehouse Receipts' dematerialised ? Briefly explain the process of dematerialisation of warehouse receipts of commodities and mention the entities that are involved in this process ?

21. Explain the different types of demat accounts opened by the depositors of commodities ?

22. What are the features of foreign exchange markets and how do they compare with otherfinancial markets ?

23. Explain spot and forward rates and the factors determining forward margins.

24.What is a currency option ? What are its types ? What are the factors that impact the pricing of an option ? Discuss.

25. Discuss the various techniques of currency exposure management.

26. What do you mean by Repo ? What are its uses ? How is it priced ? What are the different types of Repos ?

What is Investment management

Investment management involves first making an 
investment decision and next protecting and promoting the Capital value of such investments. In this process, there is need for makinginvestment analysis at two levels namely at macro level- market analysis.

Market analysis involves the analysis of the market 
trends of some indicators like prices, volume of trade etc. Company analysis comprises of the study of companys fundamentals in terms of its operational and financial results. Then the analysis should extend to comparison of the companys performance with that of the industry to which it belongs and the market as a whole.

Components of Investment Management

Chart I shows what is investment and its components namely:

(a) Investment analysis,
(b) Investment decision making
( c ) review and monitoring of investment based on research.

The study of fundamentals will reveal the industry and the 
companies to invest in while the study of technicals will tell us the timing of purchase and sale decisions.

There are four types of decisions which an investors can make , which are explained below briefly:

(a) Buy Decision :
When investment analysis shows that a 
company share price is undervalued in terms of the fundamentals and expectations of the company relative to other companies in the same industry, its share recommended to be bought.
(b) Sell Decision: When investment research reveals that a company share is overvalued in the market, relative to its fundamentals, and expectations based on some norms like P/E 
multiple, book value or present value of discounted cash flows etc. then that share is recommended to be sold.

( c ) Hold decision : when research shows that a companys future performance is uncertain and fundamentals and the market do not reveal any reliable trend, then a hold decision has to be taken.
(d) Average Up/Down : when the market trend is against your position, say you want to sell, when the market price is falling then small doses of purchase have to be effected to average down your price per share. On the reverse side, if you want to buy, but the market price is countinuing to rise, instead of falling as expected by you, then slow doses of sales have to be made to average up your price per share.


What is Options

It is a 
derivative security used for the purpose of risk management in the investment market, based on some security. Futures, forwards, swaps, options etc., are all examples of hedge against risk. Investors are risk averse and want to reduce the risk. Individuals and corporations have a strong urge to reduce or manage risk and this is secured by trading in derivative markets.

The volatility in share prices require to be hedge. Thus, the larger the volatility the larger is the hedging demand. This is secured through the options and futures. Thus the volume of futures or options can cause higher or lower volatility in underlying share/securities. These are all tools for risk management and no correlation is empirically found for options to increase or reduce volatility of shares prices

Characteristics of Options

Derivatives have many distinctive characteristics.

1. Their origin is from some other security, commodity or reference point, (such as indexes.)
2. They are instruments of hedge against risk of undue volatility.
3.They are leveraged instruments for risk management based on original security or instrument.

Calls and puts

The two major type of stock options are calls and puts. A call gives the investors the right to purchase 
100 shares of a particular stock at a fixed price until a specific date. An investor who purchases a call option locks in a price on 100 shares of stock for a predetermined time. A put option gives an investor the right to sell 100 shares of a particular stock at a fixed price until a specific date. A put in a price at which to sell stock rather than a price at which to buy stock. Both puts and c alls provide the investor with the right, but not the obligation, to use the option. Stock options are created, or written, by other investors who wish to earn income from selling the options. The writers then become obligated to sell (if a call has been sold) or purchase (if a put has been sold) the stock if and when the owner of the option decides to exercise the put or call.

Puts and calls derive their values from the values of the stock that they can be used to sell or purchase. Stock options pay no dividends or interest and expire without any value if not used by the expiration date. The value of call option is directly related to the value of the underlying stock(i.e. the option value increase when the stock value increase) and the value of a put is inversely related to the value of the underlying stock (i.e., the option value increase when the stock value decrease ). Option values are also affected by the time remaining until expiration, the price volatility of the underlying common stock and the market rate of interest.

Types of Derivatives

The security or 
asset classes on which the derivatives depend are :

(1) Debt or Bonds, (2) Equities ,(3) Indexes, (4) Commodities, (5) Currencies.

Options vs. Badla 

The age old method of badla financing facilities the carry forward transactions in the stock market and serves almost the same purpose of helping speculation and imparting greater volume and better liquidity , as in the case of options. In both methods, no delivery of securities is envisaged and both depend on some underlying securities traded on cash/delivery basis. Then why do SEBI and other influential sources advocate the substitution of badla by options in India? Their perception is that badla adds to spec ulation and it is better to separate the speculative market from real investment market, so that genuine investors are protected from the effect of excessive speculation. Options would have the same effects and objectives as badla trading. Both increase liquidity, cater to the instinct of speculation and provide a hedge against risk. Both are tools of risk management and based on some rules and regulations, margins and other terms.

The differences between them and the advantages of options over Badla may be set out as follows:

The risk can be limited and kept with in a range both in upward and downward direction in the case of options. Transparency in operations is possible due to well organized trading in contrasts in options. No manoeurvrability of terms, margins, expiration dates and no flexibility in operations are possible. Cash outlay is limited to the premiums paid and risk taken can be kept in limits. But once the contract period is over the right to nexercise option ceases and no advantage can be taken of any favourable change in price. But in the case of badla, money lending is used as a tool. There is flexibility of margin fixation, and in fixation of carry forward prices. Badla terms can be bargained and the trader has the chance to adjust his purchase and sale position depending on the price movements after settlement, which is not possible for the option purchaser once the contract period is over.

Thus, options and badla have both 
advantages and disadvantages. The edge of options over badla will come in due to electronic trading possible through the use of computer network and this will also ensure greater transparency to trading in options. Otherwisw the time tested method of badla is by itself not inferior as a method of facilitating speculative trading and to increase the volume of trade and liquidity in the securities markets.