Role Of Hedging In Financial Market

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INTRODUCTION Hedging is one of the main functions provided by future market and also one of main the reason for existence of future markets. The main purpose of hedging on the futures markets is to minimize risk and possible revenue losses associated with the adverse cash price changes. The risk of price variability of an asset can be managed by mechanism of hedging. The hedging activity can be considered as exchanging price risk for basis risk. The basis defined hedging as cash price minus nearly future price. The basis between a futures contract and its underlying commodity is an important measure of the cost of using the future contract to hedge. 1.1 INDUSTRY PROFILE Financial services industry is a term used for the industry which provides…show more content…
 Internet-based online trading.  Online Bombay stock exchange and National stock exchange implementation. 1.5 FINANCIAL MARKET A financial market is a market that brings buyers and seller together to trade in financial assets such as securities, bonds, commodities, derivatives and currencies. The purpose of a financial market is to set prices for global trade, raise capital and transfer liquidity and minimize the risk. There are many components to a financial market. Money market and capital markets are mostly used as components of financial market. A. MONEY MARKET Money market is used for a short-term basis. Always used for assets up to one year and capital markets are used for long term assets. Capital market used for asset with maturity greater than one year. Capital markets include the equity (securities) market and debt (bond) market. Together the money markets and capital markets comprise a large portion of the financial market and are often used together to manage liquidity and minimizes the risks for companies, governments and individuals. B. CAPITAL…show more content…
Over the past 140 years, BSE has facilitated the growth of the Indian corporate sector by providing it an effective capital-raising place. It is known as Bombay Stock Exchange, and it is more popular in India. BSE was established as "The Native Security & Stock Brokers' Association" in 1875. Bombay Stock Exchange is a corporatized, with a broad security holder-base which includes two leading global exchanges, Deutsche Bourse and Singapore Exchange both are working as strategic partners. BSE provides an effective and transparent market for trading in equity, bonds, derivatives, mutual funds, IPO, ETF etc. It also has a place for trading in equities of small-and medium enterprises (SME). BSE also provides a host of other services to capital market participants including risk management, clearing, settlement, market data services and education. It has a global reach with customers around the world. Bombay Stock Exchange systems and processes are designed to safeguard and fair market for investors and responsible for the growth of the Indian capital market and stimulate innovation and competition across all market segments. BSE is the first stock exchange in India and second in the world. Bombay Stock Exchange (BSE) the first stock Exchange in the country and second in the world. BSE

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