SWAP

A swap can be defined as barter or an exchange. A swap is contract whereby parties agree to exchange obligations that each of them have under their respective underlying contracts or we can say a swap is an agreement between two or more parties to exchange sequence of cash flows over a period in future . The parties that agree to swap are known as counterparties. Swap is an agreement between two counterparties to exchange two streams of cash flows—the parties "swap" the cash flow streams. Those cash flow streams can be defined in almost any manner. In other words: In a swap, two counterparties agree to a contractual arrangement wherein they agree to exchange cash flows at periodic intervals

Options

option is purchasing right but not the obligation, to buy or sell a specified underlying item at an agreed upon price, known as exercise price or strike price. In other words Options are contracts that give the buyers the right (but not the obligation) to buy or sell a specified quantity of certain underlying assets at a specified price on or before a specified date. On the other hand, the seller is under obligation to perform the contract (buy or sell). The underlying asset can be a share, index, interest rate, bond, rupee-dollar exchange rate, sugar, crude oil, Soya bean, cotton, coffee etc. An option contract is a unilateral agreement in which one party, the option writer, is obligated to perform under the contract if the option holder exercises his or her option. (The option holder pays a fee or "premium" to the writer for this option.) The option holder, however, is not under any obligation and will require performance only when the exercise price is favorable relative to current market prices. If, on the one hand, prices move unfavorably to the option holder, the holder loses only the premium. If, on the other hand, prices move favorably for the option holder, the holder has theoretically unlimited gain at the expense of the option writer. In an option contract the exercise price (strike price), delivery date (maturity date or expiry), and quantity and quality of the commodity are fixed. There are two basic types of options-call and put. A call option gives an investor right to buy underlying item during specified period of time at an agreed upon price while put option confers the right to sell it. Before going into Call and Put Options it is necessary to understand • American options can be exercised at any time between the date of purchase and the expiration date. Most exchange-traded options are of this type. . • European options are different from American options in that they can only be exercised at the end of their lives. The options on the Nifty and Sensex are European style options--meaning that the buyer of these options can exercise his options only on the expiry day. He cannot exercise them before the expiry of the contracts as in case with options on stocks. As such the buyer of index options needs to square up his positions to get out of the market. In India all stock options are American style options and index options are European style options. The significant difference between a future and an option is that the option provides the contracting parties only an option, not an obligation, to buy or sell a financial instrument or security at a pre-fixed price, called the strike price. Obviously, the option buyer will exercise the option only when he is in the money, that is, he gains by exercising the option

FUTURES

A Future contract is an agreement between two parties to buy or sell an asset at a certain time in future at a certain price. Future contracts are special type of forward contracts in the sense that the former are standardized exchange-traded contracts. In other words A future contract is one in which one party agrees to buy from/ sell to the other party a specified asset at price agreed at the time of contract and payable on future date. The agreed price is known as strike price. The underlying asset can be commodity, currency debt, or equity. The Futures are usually performed by payment of difference between strike price and market price on fixed future date and not by the physical delivery and payment in full on that date. Features Of Future Contract • An organized exchange. • Unlike the Forwards, the Future contracts are standardized contracts and are traded on stock exchange • It is standardized contract with standard underlying instruments, a standard quantity and quality of the underlying instrument that can be delivered and standard time for such settlement transactions. • Existence of a regulatory authority. • Margin requirements and daily settlement to act as a safeguard. • Leveraged positions--only margin required. • Trading in either direction--short/long • Index trading. • Hedging/Arbitrage opportunity.

Forward Contract

There are no sure things in global markets. Deals that looked good six months ago can quickly turn sour if unforeseen economic and political developments trigger fluctuations in exchange rates or commodity prices Over the years traders have developed tools to cope with these uncertainties. One of this tool is the forward agreements “A contract that commits one party to buy and other to sell a given quantity of an asset for fixed price on specified future date”. In Forward Contracts one of the parties assumes a long position and agrees to buy the underlying asset at a certain future date for a certain price. The specified price is called the delivery price. The contract terms like delivery price, quantity are mutually agreed upon by the parties to contract. No margins are generally payable by any of the parties to the other. Features of Forward Contract • It is negotiated contract between two parties i.e. Forward contract being a bilateral contracts, hence exposed to counterparty risk. • Each Contract is custom designed and hence unique in terms of contract size, expiration date, asset quality, asset type etc. • A contract has to be settled in delivery or cash on expiration date • In case one of two parties wishes to reverse a contract, he has to compulsorily go to the other party. The counter party being in a monopoly situation can command at the price he wants.

Derivative

Derivatives are financial contracts whose value/price is dependent on the behavior of the price of one or more basic underlying asset (often simply known as underlying).These contracts are legally binding agreements, made on trading screen of stock exchange, to buy or sell an asset in future. The asset can be share, index, interest rate, bond ,rupee dollar exchange rate ,sugar , crude oil, soya been, coffee etc. Everybody wants to know about them, everybody wants to talk about them. Derivatives however remain a type of financial instrument that few of us understand and fewer still fully appreciate, although many of us have invested indirectly in derivatives by purchasing mutual funds or participating in a pension plan whose underlying assets include derivative products A simple example of derivative is curd, which is derivative of milk. The price of curd depends upon price of milk which in turn depends upon the demand and supply of milk. Section 2(aa) of Securities Contract (Regulation) Act 1956 defines Derivative as: "Derivative" includes - • “a security derived from a debt instrument, share, loan whether secured or unsecured, risk instrument or contract for differences or any other form of security; • a contract which derives its value from the prices, or index or prices, of underlying securities ”. A working definition of derivative which will help to lay foundation. “A derivative can be defined as a financial instrument whose value depends on (or derives from) the values of other, more basic underlying variables.” ---John C. Hull Derivatives are compared to insurance. Just as you pay an insurance company a premium in order to obtain some protection against a specific event, there are derivative products that have a payoff contingent upon the occurrence of some event for which you must pay a premium in advance. Example Suppose you have a home of Rs. 50, 00,000. You insure this house for premium of Rs 15000 (It is a very risky house!) Now you think about policy (ignoring the house) as an investment. • Suppose the house is fine after 1 year. You have lost the premium of Rs 15000. • Suppose your house is fully damaged and broken in one year . You receive Rs 50,00,0000 on just paying premium of Rs 15,000.If you have bought insurance of any sort you have bought an option. Option is one type of a derivative.

RATIO ANALYSIS

A ratio is used as a yard stick for evaluating the financial position and performance of a firm. Ratio analysis is the process of establishing liquidity, solvency and profitability of a concern. Ratio analysis can be used by the management as a means of checking up on the efficiency with which working capital is being managed in the enterprise. This is the most important tool available to financial analysts for their work. An accounting ratio shows the relationship in mathematical terms between two inter related accounting figures. Ratio analysis simplifies the comprehension of financial statements. Ratio calculated here on the following ways: a) Assessing the liquidity. b) Assessing the solvency position. c) Assessing the efficiency in resource utilization. d) Assessing the profitability of the firm.

MANAGEMENT OF WORKING CAPITAL

Guided by the above criteria, management will use a combination of policies and techniques for the management of working capital. These policies aim at managing the current assets (generally cash and cash equivalents, inventories and debtors) and the short term financing such that cash flows and returns are acceptable.  Cash Management: Identify the cash balance which allows for the business to meet day-to-day expenses, but reduces cash holding costs.  Inventory Management: Identify the level of inventory which allows for uninterrupted production but reduces the investment in raw materials and minimizes re ordering cost and hence increases cash flow ;  Debtors Management :Identify the appropriate credit policy ie credit terms which will attract customers , such that any impact on cash flows and cash conversion cycle will be offset by increased receive and hence return on capital.  Short Financing: Identify the appropriate source of financing; given the cash conversion cycle, the inventory is ideally financed by credit granted by the supplier: however it may be necessary to utilize a bank loan, or to convert “debtors to cash”.  These items are also referred to as circulating capital.

FACTORS DETERMINING WORKING CAPITAL

Working Capital refers to that part of the firm’s capital, which is required for financing short-term or current assets such a cash marketable securities, debtors and inventories. Funds thus, invested in current assets keep revolving fast and are constantly converted into cash and this cash flow out again in exchange for other current assets. Working Capital is also known as revolving or circulating capital or short-term capital.The following factors determine the working capital requirements of a firm --- 1.     Nature of the Industry 2.     Demand of Industry 3.     Cash requirements 4.     Nature of the Business 5.     Manufacturing time 6.     Volume of Sales 7.     Terms of Purchase and Sales 8.     Inventory Turnover 9.     Business Turnover 10. Business Cycle 11. Current Assets requirements 12. Production Cycle 13.     Credit control 14.     Inflation or Price level changes 15.     Profit planning and control 16.     Repayment ability 17.     Cash reserves 18.     Operation efficiency 19.     Change in Technology 20.     Firm’s finance and dividend policy 21.     Attitude towards Risk

Health Tourism in Kerala/Medical tourism in kerala

Kerala, the "God's own country" is ornamental with emerald backwaters, serene beaches and lush green coconut groves. Each year 1000's of travelers from around the world visit here to explore the tranquil beauty of kerala. Recently Kerala, the south Indian state has attained a pride of place in the field of medicine. For many years kerala has been offering ayurvedic treatments and now a days medical tourism is added as another facet of Kerala's tourism industry. With a medical tourism package a medical tourist will get a product where apart from travel package, he / she will be provided medical treatment at the best hospitals. The medical treatment for various ailments are packaged with leisure packages at the best tourist resorts. Kerala state tourism department, in collaboration with the various tour operators, travel agents, hoteliers and with the people who are in the medical field is trying to develop kerala as a world class destination for medical tourism. Presently, kerala tourism is marketing several Ayurveda & health packages and has got tremendous potential to boom in the medical tourism arena. Kerala is famous across the globe for its alternative medical therapies such as Ayurveda. In all the 14 district of kerala one can find quality ayurveda centers. Ayurveda is an ancient form of treatment which enables the patient to rejuvenate and revitalize the mind, body and soul and it has abundant of well trained people who deals in this special form of treatment. Besides Ayurveda, Kerala has got experienced allopathic medical professionals and well equipped hospitals that offer treatments of western standards at an affordable price. Recent years has witnessed that patients of western countries has started choosing Kerala as a destination for treatment of various diseases due to high quality services and lower treatment costs. Kerala is well connected to several Middle East European and Southeast countries by air. Even it has good number of hospitals and renowned specialized doctors in most of the disciplines. Moreover the above said features, the wonderful climate in kerala and the ability of natives to speak English helps Kerala to be the most sought after destination for medical treatment in the entire nation. Patients from around the globe settled for Kerala as because the charges of major surgical procedures like cardiac surgery, dentistry, and cosmetic surgery is very low in compare to develop western countries. Even in Kerala, patients get the countries. The medical professionals of Kerala provides good pre and post-operative care to their patients so that they can have a positive experience. After medical treatments the medical tourists can spend time in high quality resorts or houseboats in kerala.