Archives: Volume 1 • Number 4 •October-November 2007

Speculation Strategies Using Investment in Options

Derivatives have emerged as the key financial instruments to hedge financial risk. The volatility and uncertainty in the global market has forced investors to use derivatives to hedge their positions. The speculator, being a risky player in the market, needs sound strategies for speculation, otherwise he may end up in making huge losses. This study aims at constructing an optimal portfolio of options for speculators and compares its performance with that of an optimal stocks portfolio. A mathematical programming model similar to Sharpe’s optimization model is used to construct these optimal portfolios. An attempt has been made to compare and analyze both the portfolios to show how the options portfolio gives better returns on average than the stocks portfolio.

Mihir Dash
Alliance Business Academy
Bangalore

Narendra Babu
Futures First Info Services (P) Ltd
Bangalore

Mahesh Kodagi
Industrial Development Bank of India
Mumbai

In the era of volatile global markets corporate sector has accepted the fact that now they have to operate in more competitive and challenging environment. Looking forward for bright future ahead corporate sector has realized their obligation towards society and to meet this demand they are ostensibly focusing to introduce concept of corporate governance in their business. Corporate governance mechanism is designed to monitor and control the organization affairs not only to add value towards sustainable return to shareholder’s wealth but concentrate on aligning business activity as per investor’s expectations. Thus corporate governance issues have become part of business activities whereby structures and processes are formulated for direction & control of companies finally encouraging effective planning and quality decision making. Present paper is an attempt to answer some fundamental questions raised about complex network of relationship among shareholders, Board of Directors, bankers, auditors etc. Results of the study have proved that in India corporate sector is still found to be in ethical dilemma regarding introduction of corporate governance practices. Finally study is concluded by suggesting that even the most developed countries, especially United States have acknowledged this fact that code of corporate governance envisages adherence to highest standard of honesty and integrity that result in adding value to wide spectrum of corporate clients.

Nidhi Walia
Faculty
Punjab Institute of Management and Technology
Punjab

Dr.Ravi Kiran
Associate Professor
School of Social Science & Management
Thapar University
Patiala,Punjab

Effectiveness of PMRY Scheme in India

The financial system is the lifeline of the economy. Banks are the backbone of the financial sector. They are the most dominant segment of the country’s financial system. Banks plays a pivotal role in the development of a sound economy and form the core of the money market. It facilitates payment mechanism, mobilized insured deposits, act as credit intermediaries and serve as the principal channel for transmission of monetary policy actions to the economy at large.

The banks provided financial assistance only to the Industries which had already established, financially sound, capacity to repay the loan, favourable credit guarantee etc. After the Independence in 1947, the Government of India as well as the State Governments was trying to show concern for the rural poor. The rural scenario in India was quite disturbing and needs much attention to eradicate poverty through employment opportunities. Therefore, the government had come up with different schemes to eradicate poverty. PMRY Scheme was announced and implemented in the VIIIth Five-Year Plan till now.

C.Muthulakshmi
Lecturer
Department of Management Studies
PSR Engineering College
Sivakasi,Tamil Nadu

Under-Pricing and Undervaluation of PSUs' Shares in Disinvestment Programme: A Study

As the new economic policy (liberalisation-privatisation-globalisation-policy) has been adopted as a part of economic stabilization and structural adjustment programme(s & sap) in 1991, the disinvestment has started in public sector as a route of privatization. The review of literature on privatization and disinvestment reveals that there are some issues that should be critically overviewed and it needs to suggest the remedies for their problems. One of these important issues is under-pricing and undervaluation of psus’ shares in disinvestment programme in indian public sector especially at initial phase. The national assets should not be handed over to private sector at throw-away prices. The policies should be intervened in such a way that the policy of the disinvestment will not affect the last man of the country, adversely. So it is the need of the indian society to estimate the extent of loss to government in such cases and to suggest the appropriate remedies.

Shrikrishna Mahajan
Sr.Lecturer
Department of Commerce and Management
Shivaji University
Kolhapur,Maharashtra

Awareness and Perception of People Towards Mutual Funds at Coimbatore City

Today’s Indian financial services segment encompasses a whole gamut of services like Insurance, Mutual fund, Capital market, Derivatives market and equity market. The Mutual Fund is an investment vehicle for investors who pool their saving for investing in diversified range of securities with the aim of gorgeous yields and appreciation in their value. Now-a –days Mutual funds attracted most of the socio –economic classes because peoples sensing that Investment is vital part of every human beings life as well as they expect fast return even while there is few investment decision risks. People are highly influenced by these mutual funds companies’ new schemes and different services. But success of Mutual fund companies depends on Consumer awareness, perception, demographic and geographic factors. Hence, an attempt was made to know Coimbatore based investors awareness, investment option, purpose of investment etc.For this study Consumer opinions are collected and the data is analyzed to determine awareness and perception of people towards Mutual Funds at Coimbatore city.

T.Devasenathipathi
Ph.D Scholar
Department of MBA
D.J.Academy for Managerial Excellence
Coimbatore,Tamil Nadu

Dr.P.T. Saleendran
Assistant Professor
Department of MBA
D.J.Academy for Managerial Excellence
Coimbatore,Tamil Nadu

Dr.A.Shanmugasundram
Assistant Professor
Department of Behavioral Science
American Institute of Medicine
Coimbatore,Tamil Nadu

Trading of Life Insurance Policies- A Critical Study

Life Insurance is a contract for the payment of a sum of money to the person assured (or nominee) on the happening of the event insured against. Usually the contract provides for the payment of an amount of money on the date of maturity or at specific dates at periodic intervals or an unfortunate death, if it occurs earlier. It is said to be superior to other forms of savings because of protection, aid to thrift, liquidity, tax relief etc. Any person who has attended majority is eligible to enter into a valid contract can take out a life insurance policy for himself/herself and for those in whom he or she has insurable interest.

In India, Life Insurance Corporation of India Ltd. (LIC) is the biggest company dealing in life insurance business. LIC was established as a statutory corporation under the Life Insurance Corporation Act of the Parliament which received the consent of the Government on 18th June 1956. The Act came into force on 1st July 1956 and the Corporation began to function w.e.f. 1st September 1956, since then carrying on life insurance business in India. 

Dr.K.S.Jaiswal
Sr.Faculty Member
Mahatma Gandhi Kashi Vidyapith
Varanasi,Uttar Pradesh

Mrs.Dipti Saha
Research Scholar
Mahatma Gandhi Kashi Vidyapith
Varanasi,Uttar Pradesh