Derivatives Definition..

Derivative is a product whose value is derived from the value of one or more basic variables, called bases (underlying asset, index, or reference rate), in a contractual manner. The underlying asset can be equity, forex, commodity or any other asset. For example, wheat farmers may wish to sell their harvest at a future date to eliminate the risk of a change in prices by that date. Such a transaction is an example of a derivative. The price of this derivative is driven by the spot price of wheat which is the "underlying". In the Indian context the Securities Contracts (Regulation) Act, 1956 (SC(R)A) defines "derivative" to include-

1. 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.

2. A contract which derives its value from the prices, or index of prices, of underlying securities. . . Derivatives are securities under the SC(R)A and hence the trading of derivatives is . governed by . the regulatory framework under the SC(R)A.

what GE does...

General electric one of the greatest company known for their innovative approach to change the world around them. The core competency of the company is their approach to the future .I am quoting the statement of the CEO of the company.

At GE we ask, “Why predict the future when you can create it?” From our earliest days, our company has used the tools of research, combined with a little inspiration, to create the world of tomorrow. The legacy of GE’s ingenuity offers a rich history we are proud to share with the world.

Look!!!!! The GE approach to their business

Gold is Hold....

Investor should keep their opinion on gold is on hold because gold is a good hold at this level.Globally gold as the asset class has shown their great interest by the investor in last few years, the renewed interest has been generated in gold due to recession and slowdown in economy. In the time of recession the equity has crashed significantly while the gold has hit their high the safe heaven buy by the investor ,hedge fund buy by to protect the investment and buying by central banks around the globe for the liquidity infusion in the system has led the buyout sentiments in the gold market. The gold has the tendency to outperform the all the asset class at the time of slowdown in economy it was also proved in the current slowdown. The global condition is yet to come out of wood so gold is hold and even a good buy at current level.

Hold in gold strategy will give good return in next six month.

Gold is hold

Gold is shining in the asset class the uncertainty in the economic recovery has bring safe haven buying in the gold .The scarce nature of the gold is playing advantage for this asset class,Gold in India inching towards 20000 and still it is looking hot and investment .Global demand has gone up because of safe heaven buying and bank buying.The trend is going to continue in near future so buy and hold the GOLD.

Types of Debt Funds

Gilt funds invest in only treasury bills and government securities,which do not have a credit risk (i.e. the risk that the issuer of the security defaults).

Diversified debt funds on the other hand, invest in a mix of government and non-government debt securities.

Junk bond schemes or high yield bond schemes invest in companies that are of poor credit quality. Such schemes operate on the premise that the attractive returns offered by the investee companies makes up for the losses arising out of a few companies defaulting.

Fixed maturity plans are a kind of debt fund where the investment portfolio is closely aligned to the maturity of the scheme. AMCs tend to structure the scheme around pre-identified investments. Further, like close-ended schemes, they do not accept moneys post-NFO. Thanks to these characteristics, the fund manager has little ongoing role in deciding on the investment options. As will be seen in Unit 8, such a portfolio construction gives more clarity to investors on the likely returns if they stay invested in the scheme until its maturity. This helps them compare the returns with alternative investments like bank deposits.

Floating rate funds invest largely in floating rate debt securities i.e. debt securities where the interest rate payable by the issuer changes in line with the market. For example, a debt security where interest payable is described as ‘5-year Government Security yield plus 1%’, will pay interest rate of 7%, when the 5- year Government Security yield is 6%; if 5-year Government Security yield goes down to 3%, then only 4% interest will be payable on that debt security. The NAVs of such schemes fluctuate lesser than debt funds that invest more in debt securities

offering a fixed rate of interest.

Liquid schemes or money market schemes are a variant of debt schemes that invest only in debt securities where the moneys will be repaid within 91-days. As will be seen later in this Work Book, these are widely recognized to be the lowest in risk among all kinds of mutual fund schemes.