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Financial markets are, by nature, extremely volatile and hence the risk factor is an important concern for financial agents. To reduce this risk, the concept of derivatives comes into the picture. Derivatives are products whose values are derived form one or more basic variables called bases. These bases can be underlying assets for example commodity, equity, currency, interest rate, etc. These financial derivatives provide a number of economic functions: help in transferring risks form risk averse people to risk oriented people, help in the discovery of future as well as current prices, to catalyze entrepreneurial activity, increase the volume traded in markets because of participation of risk averse people in grater numbers and also increase savings and investment in the long run. Due to these reasons, the volume of derivatives transactions is growing in geometric proportion worldwide. For instance, the total notional amount outstanding of interest rate, credit, and equity derivatives alone as on June 30, 2010 was $466.8 trillion. Of the total notional amount, the fourteen largest global derivatives dealers, known as the G14 group, reported $354.6 trillion or 82 percent. And the outstanding US-based dealers reported a notional amount outstanding of $172.3 trillion of 37 percent of the total. Financial derivatives facilitate greater diversification of investment and enable risk to be transferred across allocation of risks has made overall capital markets more efficient, while the availability of derivatives to both limit and leverage risk exposures has increased markets capitalization and liquidity in the underlying cash markets. But emerging derivative markets also pose important challenges to financial stability, particularly in areas where vulnerabilities to changes in risk extend across institutions and national boundaries. Emerging market regulators recognize the importance of developing derivative markets; they remain concerned about potentially excessive risk-taking, particularly in the context of rapid evolution of products, inadequate understanding of risk management techniques, and limited supervisory capacity. In a nutshell, there lies a great emphasis on authentic research on the pros and cons of derivative instruments. To provide a platform for provide a platform for potential researchers, the edited volume of research papers in financial derivatives using advanced statistical and econometric tools presents the complex subject of financial derivatives in a lucid manner by the way of using real-world example and simple research language. Thus encourage the young social scientists to conduct the research in the field to financial derivatives, more effectively. This edited volume of research articles will provide the rock-solid foundation on derivatives research. Totally 60 Research papers are contributed by a mixture of Market Specialist, Academicians and the research Scholars in the fields of Financial Derivatives, which were divided into two edited volumes namely, (1) Research in financial Derivatives: Commodity, Equity, Currency and Interest Rate & (2) Financial Derivatives: Market and Applications, comprising 25 & 35 research papers respectively. This volume is designed to contribute to the existing body of literature available on financial derivatives and also meet the need for a comprehensive guide to the complexities in financial derivatives. Hence it will commend itself to all the category of readers, particularly Academicians, Researchers, Financial Derivatives Market Stakeholders, Investors, Speculators, and the Student Community.
ISBN - 9788183874823
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Pages : 577
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