View
225
Download
0
Category
Preview:
Citation preview
8/6/2019 Derivative Equity (1)
1/101
A
PROJECT REPORT
ON
AWARENESS, PREFERENCE AND POTENTIAL
GROWTH OF DERIVATIVE WITH SPECIAL
REFERENCE TO EQUITY ONLY.
UNDERTAKEN AT
India Infoline Securities Pvt. Ltd., Surat.
Submitted By:
Miss Krishna Dhamecha
06MBA10
Guided By:
Mr. Govind Dhinaiya
MBA Programme
(Year 2006-08)
SHRIMAD RAJCHANDRA INSTITUTE OF
MANAGEMENT AND COMPUTER APPLICATION
8/6/2019 Derivative Equity (1)
2/101
DECLARATION
I here by declare that the summer project report titledAWARENESS, PREFERENCE AND POTENTIAL GROWTH OF
DERIVATIVE WITH SPECIAL REFERENCE TO EQUITY ONLYis based
on original piece of work done by me for the fulfillment of degree of
Master of Business Administration and whatever information has been
taken from any sources had been duly acknowledge.
I further declare that the personal data & information
received from any respondent during survey has not been shared with
any one and is used for academic purpose only.
Date: Krishna K. Dhamecha
Place: (06MBA10)
8/6/2019 Derivative Equity (1)
3/101
ACKNOWLEDGEMENT
It is a fact that none of the human being in this world is 100%
perfect and in order to gain some perfect ness in itself an individual surely
needs a helping hand. The same was with me with respect to the project
that I was undergoing during this session of 2 months. As I too was
illiterate with this research topic that I selected for my research at the
initial stages, I got acquainted with it slowly and steadily through efforts
and surely from various intelligent and helpful personalities. I would like
to extend my heartily thanks to all of them through this
acknowledgement.
To start with, I would like to thanks to Mr. Mayur Bhagat, branch
head of India Infoline Pvt. Ltd., Surat, who have been source of constant
inspiration and encouragement to me who have from time to time offered
valuable suggestion and ideas.
I would also like to thanks to Mr. Manish Bhatia, Mr. Kalpesh
Chopra and Mr. Dharmesh Chaudhary for giving me necessary
guidelines.
I personally would like to thanks our director Dr. Bankim Patel
and my training coordinator Mr. Govind Dhinaiya, our Faculty for
assisting me throughout the project period, guiding me and assisting at
various stages and thus sharing his valuable knowledge with me to
enhance my knowledge and helping me in preparing a project.
I would also like to thanks all the Faculty members, who directly or
indirectly help me to successfully complete my project.
I would also like to extend my thanks to all the respondents who
spared their valuable time and helped me in filling up the questionnaire
8/6/2019 Derivative Equity (1)
4/101
by providing the needed information. Lastly, I would like to thanks all of
those who have helped to furnish this project successfully.
EXECUTIVE SUMMARY
Days were gone when people only invest their money in post office
or in banks. Today people have several choices for the investment. One of
the most emerging choices is to invest in shares (equities). To get good
return on investment, people are ready to take risks. Law always says
that investors get higher return if they take high risk. For high risk there is
one avenue to invest and that is derivatives.
This Project Focused On AWARENESS, PREFERENCE AND
POTENTIAL GROWTH OF DERIVATIVE WITH SPECIAL REFERENCE TO
EQUITY ONLY. Objectives behind this project are to know awareness level
among investors, to know their preference of investment in derivative and
to know whether potential growth of derivative is there or not.
I have used descriptive research design because it only describes
the situation and used non-probability convenience sampling method.
Questionnaire is used for survey purpose and before going to actual
survey pilot testing was also done. Sample size is of 100 and respondent
were from India Infoline Securities Pvt. Ltd. I have used SPSS software for
analysis purpose and in that I have used T-test because data are interval
in nature.
Most of the customers are aware about derivative market. There are
certain customers who are not aware about derivative market but they
are investing only and again on the contrary investors have all knowledge
8/6/2019 Derivative Equity (1)
5/101
about derivative market, they are aware about derivative market but they
are not investing in derivatives. Reasons for not investing in derivative
market are high return and margin money. Investors are investing in
derivatives only due to earn high return and hedge the risk.
Most of the investors are preferred to invest in Index Future and
Index Option in proportion of 20% - 50% of their portfolio. Mostly service
men are investing in derivative market. When we talk about potential
growth, it can be known from past data only. It says that currently a
derivative is in booming stage but analysts says that it will decline in
2007-2008. We can see from graph given at last.
Hence it can be concluded that investors are aware about derivative
market as well as they are preferred to invest in derivative market also,
even currently growth of derivative market is booming but technical
analysts says that derivative market will turn in to decline stage in 2007-
2008.
It is recommended to company that firstly convert all non users into
users as there are many people who are aware about derivative market
but not at all investing in it so company should give more attention
towards those people. Another that is from survey we came to know that
only service people are investing in derivatives so company can focus on
students also because derivatives are risky and younger generation likes
to take risk so there is potential in students.
8/6/2019 Derivative Equity (1)
6/101
TABLE OF CONTENTS
Sr. No. TOPIC Page No.1.0 INTRODUCTION
1.1Share Broking Service Sector Profile
1.2Theory Profile
1.3Company profile
2.0 RESEARCH METHODOLOGY3.0 DATA ANALYSIS & INTERPRETATION4.0 FINDINGS5.0 RECOMMANDATIONS
BIBLIOGRAPHYAPPENDIX
8/6/2019 Derivative Equity (1)
7/101
SHARE BROKING SERVICE SECTOR PROFILE:
There are several national as well as local players in stock trading
services which are providing various services to their customers like
online trading, portfolio management system, stock them several national
level players.
KEY PLAYERS:
5Paisa.com - Online trading, live stock quotes and market research
Advani Share Brokers - Share broking and market research services
Anand Rathi Securities - Portfolio management, corporate finance,
equity & fixed income brokerage services
Brescon Group - Advisory and broking services
CIL Securities - Stock broking & merchant banking services
CRN India - Trends of stock market, trading tips, chat etc
Churiwala Securities - Stock trading, quotes and market analysis
DSP Merrill Lynch - Investment banking and brokerage services
Dalmia Securities - Stock broking & depository services
EquityTrade - Stock trading, company news & market research
Gandhi Securities - Stock broking and investment services
Gogia Capital Services - Stock broking and market analysis
Hasmukh Lalbhai - Stock trading services Idafa Investments - Stock broking services
India Market Access - Offers stock broking, portfolio management
and investment banking services
Investsmart India - Personal finance advisory & online brokerage
services
http://www.searchindia.com/cgi-bin/search/index.cgi?ID=966377344http://www.searchindia.com/cgi-bin/search/index.cgi?ID=1016666638http://www.searchindia.com/cgi-bin/search/index.cgi?ID=955747502http://www.searchindia.com/cgi-bin/search/index.cgi?ID=973785596http://www.searchindia.com/cgi-bin/search/index.cgi?ID=947985327http://www.searchindia.com/cgi-bin/search/index.cgi?ID=956950423http://www.searchindia.com/cgi-bin/search/index.cgi?ID=987687249http://www.searchindia.com/cgi-bin/search/index.cgi?ID=947365968http://www.searchindia.com/cgi-bin/search/index.cgi?ID=955888141http://www.searchindia.com/cgi-bin/search/index.cgi?ID=964445292http://www.searchindia.com/cgi-bin/search/index.cgi?ID=987687084http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930095925http://www.searchindia.com/cgi-bin/search/index.cgi?ID=993560917http://www.searchindia.com/cgi-bin/search/index.cgi?ID=978734958http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930088159http://www.searchindia.com/cgi-bin/search/index.cgi?ID=952057582http://www.searchindia.com/cgi-bin/search/index.cgi?ID=966377344http://www.searchindia.com/cgi-bin/search/index.cgi?ID=1016666638http://www.searchindia.com/cgi-bin/search/index.cgi?ID=955747502http://www.searchindia.com/cgi-bin/search/index.cgi?ID=973785596http://www.searchindia.com/cgi-bin/search/index.cgi?ID=947985327http://www.searchindia.com/cgi-bin/search/index.cgi?ID=956950423http://www.searchindia.com/cgi-bin/search/index.cgi?ID=987687249http://www.searchindia.com/cgi-bin/search/index.cgi?ID=947365968http://www.searchindia.com/cgi-bin/search/index.cgi?ID=955888141http://www.searchindia.com/cgi-bin/search/index.cgi?ID=964445292http://www.searchindia.com/cgi-bin/search/index.cgi?ID=987687084http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930095925http://www.searchindia.com/cgi-bin/search/index.cgi?ID=993560917http://www.searchindia.com/cgi-bin/search/index.cgi?ID=978734958http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930088159http://www.searchindia.com/cgi-bin/search/index.cgi?ID=9520575828/6/2019 Derivative Equity (1)
8/101
Kisan Ratilal Choksey Shares - Stock broking and e-trading services
Kotak Securities - Brokerage services & retail distributor of financial
securities
Manubhai Mangaldas Securities - Stock broking and market analysis
Moneypore - Investment and broking services
Motilal Oswal - Online trading, live BSE and NSE quotes
Navia Markets - Stock broking, IPO and mutual funds services
Parag Parikh - Stock broking and portfolio management
Parsoli Corporation - Investment management & stock trading
services
Pratibhuti Viniyog - Stock broking services
Prudential - Investment management services
Quantum Securities - Offers broking and portfolio management
services.
Sivan Securities - offers services related investment banking &
stock broking with a focus on South India.
Skindia Finance - Brokerage firm focusing on GDR arbitrage,
equities & debt
Stock Holding Corporation of India - Custody management,safekeeping & stock broking services
StockMarkit.com - Stock quotes, news, market indicators etc
Sunidhi Consultancy - Stock broking, portfolio management & equity
research
Techno Shares - Stock broking and portfolio management
Valia Consultancy- Stock investment and trading consultancy
http://www.searchindia.com/cgi-bin/search/index.cgi?ID=979347867http://www.searchindia.com/cgi-bin/search/index.cgi?ID=947365119http://www.searchindia.com/cgi-bin/search/index.cgi?ID=987687737http://www.searchindia.com/cgi-bin/search/index.cgi?ID=1000747099http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089255http://www.searchindia.com/cgi-bin/search/index.cgi?ID=968327356http://www.searchindia.com/cgi-bin/search/index.cgi?ID=956269124http://www.searchindia.com/cgi-bin/search/index.cgi?ID=959008817http://www.searchindia.com/cgi-bin/search/index.cgi?ID=956269269http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089345http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089426http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089783http://www.searchindia.com/cgi-bin/search/index.cgi?ID=956269857http://www.searchindia.com/cgi-bin/search/index.cgi?ID=956308138http://www.searchindia.com/cgi-bin/search/index.cgi?ID=963498864http://www.searchindia.com/cgi-bin/search/index.cgi?ID=963935171http://www.searchindia.com/cgi-bin/search/index.cgi?ID=995123111http://www.searchindia.com/cgi-bin/search/index.cgi?ID=987686896http://www.searchindia.com/cgi-bin/search/index.cgi?ID=987686896http://www.searchindia.com/cgi-bin/search/index.cgi?ID=979347867http://www.searchindia.com/cgi-bin/search/index.cgi?ID=947365119http://www.searchindia.com/cgi-bin/search/index.cgi?ID=987687737http://www.searchindia.com/cgi-bin/search/index.cgi?ID=1000747099http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089255http://www.searchindia.com/cgi-bin/search/index.cgi?ID=968327356http://www.searchindia.com/cgi-bin/search/index.cgi?ID=956269124http://www.searchindia.com/cgi-bin/search/index.cgi?ID=959008817http://www.searchindia.com/cgi-bin/search/index.cgi?ID=956269269http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089345http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089426http://www.searchindia.com/cgi-bin/search/index.cgi?ID=930089783http://www.searchindia.com/cgi-bin/search/index.cgi?ID=956269857http://www.searchindia.com/cgi-bin/search/index.cgi?ID=956308138http://www.searchindia.com/cgi-bin/search/index.cgi?ID=963498864http://www.searchindia.com/cgi-bin/search/index.cgi?ID=963935171http://www.searchindia.com/cgi-bin/search/index.cgi?ID=995123111http://www.searchindia.com/cgi-bin/search/index.cgi?ID=9876868968/6/2019 Derivative Equity (1)
9/101
INTRODUCTION OF TOPIC
History of derivative:
The origin of derivatives can be traced back to the need of farmers
to protect themselves against fluctuations in the price of their crop. From
the time it was sown to the time it was ready for harvest, farmers would
face price uncertainty. Through the use of simple derivative products, it
was possible for the farmer to partially or fully transfer price risks by
locking-in asset prices. These were simple contracts developed to meet
the needs of farmers and were basically a means of reducing risk.
A farmer who sowed his crop in June faced uncertainty over the
price he would receive for his harvest in September. In years of scarcity,
he would probably obtain attractive prices. However, during times ofoversupply, he would have to dispose off his harvest at a very low price.
Clearly this meant that the farmer and his family were exposed to a high
risk of price uncertainty.
On the other hand, a merchant with an ongoing requirement of
grains too would face a price risk - that of having to pay exorbitant prices
during dearth, although favorable prices could be obtained during periods
of oversupply. Under such circumstances, it clearly made sense for the
farmer and the merchant to come together and enter into a contract
whereby the price of the grain to be delivered in September could be
decided earlier. What they would then negotiate happened to be a
8/6/2019 Derivative Equity (1)
10/101
8/6/2019 Derivative Equity (1)
11/101
commodity forward/ futures contracts. However when derivatives trading
in securities were introduced in 2001, the term security in the Securities
Contracts (Regulation) Act, 1956 (SCRA), was amended to include
derivative contracts in securities. Consequently, regulation of derivatives
came under the purview of Securities Exchange Board of India (SEBI). We
thus have separate regulatory authorities for securities and commodity
derivative markets.
Derivatives are securities under the SCRA and hence the regulatory
framework under the SCRA governs the trading of derivatives. 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.
Derivative is a financial instrument, which derives its value from an
underlying asset. The underlying assets can be stock, bonds, currency,
commodities, metals even intangible, and pseudo assets like stock
indices.
Derivatives can be of different types like future, option, swap, caps,
floor, collars etc. The most popular derivative instruments are futures and
options.
8/6/2019 Derivative Equity (1)
12/101
There are newer derivatives that are becoming popular like weather
derivatives and natural calamity derivatives. These are used as a hedge
against any untoward harpings because of natural causes.
What exactly is meant by, Derives its value from an assets?
What the phrase means is that the derivative on its own doesnt
have any value. It is considered important because of importance of
underlying. When we say an Infosys future or Infosys option, these carry a
value only because of the value of Infosys.
What are financial derivatives?
Financial derivatives are instruments that derive their value from
financial assets. These assets can be stock, bonds, currency etc. Thederivatives can be forward rate agreements, futures, options, swaps etc.
As stated earlier, the most traded instruments are futures and options.
What kind of people will use derivatives?
Derivative will find use for the following set of people.
Speculators: People who buy or sell in the market to make profit. If
you will the stock price of reliance is expected to go up to Rs. 400 in 1
month, one can buy 1-month future of reliance at Rs. 350 and make
profit.
8/6/2019 Derivative Equity (1)
13/101
Hedgers: People who buy or sell to minimize their losses. For
example, an importer has to pay US $ to buy goods and rupee is expected
to fall by Rs. 50/$ from Rs. 48/$, then the importer can minimize his
losses by buying a currency future at Rs. 49/$.
Arbitrageurs: People who buy or sell to make money on price
differential in different market. For example futures price is simply the
current price plus interest cost. If there is any change in interest, it
presents an arbitrage opportunity.
Basically, every investor assumes one or more of the above roles
and derivatives are a very good option for him.
Derivative markets perform a number of economic functions.
Prices in an organized derivatives market reflect the perception of
market participants about the future and lead the prices of
underlying to the perceived future level. The prices of derivativesconverge with the prices of the underlying at the expiration of the
derivative contract. Thus derivatives help in discovery of future as
well as current prices.
The derivatives market helps to transfer risks from those who have
them but may not like them to those who have an appetite for them.
Derivatives, due to their inherent nature, are linked to the underlying
cash markets. With the introduction of derivatives, the underlying
market witnesses higher trading volumes because of participation by
more players who would not otherwise participate for lack of an
arrangement to transfer risk.
8/6/2019 Derivative Equity (1)
14/101
Speculative traders shift to a more controlled environment of the
derivatives market. In the absence of an organized derivatives
market, speculators trade in the underlying cash markets. Margining,
monitoring and surveillance of the activities of various participants
become extremely difficult in these kinds of mixed markets.
An important incidental benefit that flows from derivatives trading is
that it acts as a catalyst for new entrepreneurial activity. Derivatives
have a history of attracting many bright, creative, well-educated
people with an entrepreneurial attitude. They often energize others
to create new businesses, new products and new employment
opportunities, the benefit of which are immense.
Derivatives markets help increase savings and investment in the
long run. The transfer of risk enables market participants to expand
their volume of activity.
How has this market developed over time?
Derivatives have been a recent development in the Indian financial
markets. But there have been derivatives in commodities market also.
There is a cotton and oilseed future in Mumbai, Soya future in Bhopal,
pepper futures in Cochin, coffee futures in Bangalore etc. But the players
in this market are restricted to farmers and industries, which need these
as an input to protect themselves from the vagaries of agriculture sector.
Globally too, the first derivatives started with the commodities, way
back in 1984. Financial derivatives are relatively late development,
8/6/2019 Derivative Equity (1)
15/101
coming into existence only in the 1970s. The first exchange where
derivatives were traded is the Chicago Board of Trade (CBOT).
In India, National Stock Exchange (NSE) introduced the first
derivatives in June 2000. The first derivatives were Index Future. The
index used was Nifty. Option trading was started in June 2001, for index
as well as stock. In November 2001, futures on stock were allowed.
Currently, there are 30 stocks on which derivative trading are allowed.
The trading is done on the exchange in the F&O (Future & Option)
segment. Index F&O is also traded in the market. The indices traded are
the Nifty and the Sensex.
Forward Contracts
A forward contract is an agreement to buy or sell an asset on a
specified date for a specified price. One of the parties to the contract
assumes a long position and agrees to buy the underlying asset on acertain specified future date for a certain specified price. The other party
assumes a short position and agrees to sell the asset on the same date
for the same price. Other contract details like delivery date, the parties to
the contract negotiate price and quantity bilaterally. The forward
contracts are normally traded outside the exchanges.
The salient features of forward contracts are:
They are bilateral contracts and hence exposed to counter party risk.
Each contract is custom designed, and hence is unique in terms of
contract size, expiration date and the asset type and quality.
The contract price is generally not available in public domain.
8/6/2019 Derivative Equity (1)
16/101
On the expiration date, the contract has to be settled by delivery of
the asset.
If the party wishes to reverse the contract, it has to compulsorily go
to the same counter-party, which often results in high prices being
charged.
However forward contracts in certain markets have become very
standardized, as in the case of foreign exchange, thereby reducing
transaction costs and increasing transactions volume. This process of
standardization reaches its limit in the organized futures market.
Limitations of forward markets
Forward markets world-wide are affected by several problems:
Lack of centralization of trading
Iliquidity
Counterpart risk
Futures Contracts
Futures markets were designed to solve the problems that exist in
forward markets. A futures contract is an agreement between two parties
to buy or sell an asset at a certain time in the future at a certain price. But
unlike forward contracts, the futures contracts are standardized and
exchange traded. To facilitate liquidity in the futures contracts, the
exchange specifies certain standard features of the contract. It is a
standardized contract with standard underlying instrument, a standard
quantity and quality of the underlying instrument that can be delivered,
(or which can be used for reference purposes in settlement) and a
standard timing of such settlement. A futures contract may be offset prior
8/6/2019 Derivative Equity (1)
17/101
to maturity by entering into an equal and opposite transaction. More than
99% of futures transactions are offset this way.
The standardized items in a futures contract are:
Quality of the underlying
Quantity of the underlying
The date and the month of delivery
The units of price quotation and minimum price change
Location of settlement
Distinction between futures and forwards contracts
Forward contracts are often confused with futures contracts. The
confusion is primarily because both serve essentially the same economic
functions of allocating risk in the presence of future price uncertainty.
However futures are a significant improvement over the forward contracts
as they eliminate counter party risk and offer more liquidity
Distinction between futures and forwardsFutures Forwards Trade on an organized
exchange
OTC in nature
Standardized contract terms Customized contract termsMore liquid Less liquidRequires margin payments No margin paymentFollows daily settlement Settlement happens at end of
period.
8/6/2019 Derivative Equity (1)
18/101
What are index futures?
Futures contracts started as a way farmers could sell their crops in
advance of harvest to lock in a good price or to raise funds a few months
before the crop was ready for market. The index futures we trade are
traded on the same exchanges where agricultural commodity futures are
still traded. The Chicago Mercantile exchange defines index futures as
"legally binding agreements to buy or sell the cash value of the
underlying Index at a specific future date." That's a big help, right? Let me
see if I can do any better with some bulleted facts which should answer
most questions:
Index futures are a financial instrument called a "futures contract"
with a value based on whatever stock index they represent. Today
there is no paper contract, just a book keeping entry, but the term
contract is still used.
The cash value of an index futures contract is based on the
underlying stock index multiplied by a fixed number plus a
premium, which represents the income that the same money would
have earned if invested elsewhere.
The value of the index futures contract fluctuates continuously
throughout the day as the underlying stock index changes. The
values of the stock indexes are recalculated every second.
Index futures are traded on an exchange. Today this often means
an electronic exchange with no actual trading floor.
The steps in a futures index transaction normally include
transmitting an order to a broker, from the broker to the exchange,matching each buy order with a sell order, transmitting confirmation
of trade time and price back from the exchange to the broker and
from the broker to the trader.
8/6/2019 Derivative Equity (1)
19/101
Index futures orders can be placed by phone or fax, but most orders
today are placed from a PC connected to the Internet.
A transaction in the more heavily traded index futures on an
electronic exchange typically takes 2-10 seconds, including all the
steps from origination to confirmation.
Unlike commodity futures, there is no physical product, so never a
phone call like, "Where do you want this 5,000 bushels of beans?"
The only thing that changes hands are bookkeeping entries on an
account statement.
Index futures can be bought or sold (or sold short) by anyone who
has an account with a futures broker.
The trader doesn't know the other party involved in the transaction,
only that the transaction was completed.
What is Stock Index Future?
Stock index futures have some special institutional features. First,
settlement, even on the delivery date, is in cash. The seller simply
delivers to the buyer the cash difference between the closing level of the
underlying index and the futures price. This cash settlement feature is
adopted because it is impractical to deliver all the stocks in the index in
their correct proportions. Indeed, for some contracts, cash delivery is not
just an alternative, but a necessity; for example, when the underlying
variable is not an asset at all but just a number, such as the CPI-W
(Consumer Price Index-Wage Earners, on which a now discontinued
contract was created in 1985 by the Coffee, Sugar and Cocoa Exchange)
or the Property Claims Services National Catastrophe Index.
8/6/2019 Derivative Equity (1)
20/101
Second, determination of its futures price depends on an estimate
of the remaining cash dividends on the underlying index through
delivery. Estimating cash dividends is not difficult over a one-year horizon
since cash dividends for individual stocks are largely predictable from a
firms past behavior, and because the law of large numbers tends to
cause errors in individual predictions to wash out. Examined over shorter
intervals, for US stocks, dividend payments are remarkably lumpy. In
particular, the ex-dividend dates of stocks tend to be concentrated in the
first two weeks of the mid-month of each calendar quarter (February,
May, August, November) a fact that is worth careful consideration for
accurate futures price evaluation.
What is Index Option?
The S&P 500 Index traded on the Chicago Board Options Exchange(CBOE) is an important example of index options. These are similar to
S&P 500 Index futures, except that the buyer has the right, but not the
obligation, to pay for and take delivery of 100 times the cash amount of
the future level of the Index on a preset future expiration date. The
option buyer will then choose not to take delivery, and no cash flow
would occur. However, the option buyer would net a loss (and the option
seller a corresponding profit) since the buyer would not recover the initial
price he paid the seller for the option.
Exchange-traded options often have special features, which make
them more complex. For example, S&P 100 Index options listed on the
CBOE can be used to buy the underlying asset by paying the strike price
8/6/2019 Derivative Equity (1)
21/101
at the market closing on any business day prior to and including the
expiration date. S&P 500 Index options, which can only be exercised on
the expiration date, are termed European options, while S&P 100 Index
options (like options on individual common stocks), which can be
exercised on any business day through and including the expiration date,
are termed American options.
Exercise of most options and futures results in delivery of the
underlying asset. Exercise of S&P Index options (on the 100 or the 500),
however, is settled in cash because it is impractical to deliver all the
stocks in the S&P 100 or 500 Index in their exact proportions. Cash
settlement upon exercise means that the call buyer receives in dollars
100 times the difference between the closing level of the S&P 100 or 500
Index and the strike price.
COMPANY PROFILE
INDIA INFOLINE Pvt.Ltd:
The India Infoline Group is committed in placing the Investor First,
by continuously striving to increase the efficiency of the operations as
well as the systems and processes for use of corporate resources in such
a way so as to maximize the value to the stakeholders. The Group aims at
achieving not only the highest possible standards of legal and regulatory
compliances, but also of efficient effective management.
PROFILE OF INDIA INFOLINE:
In 1995, Nirmal Jain founded his own independent financial research
company, now known as India Infoline Ltd. India Infoline Ltd Launched on
8/6/2019 Derivative Equity (1)
22/101
11 May 1999; www.indiainfoline.com is Indias leading and most
comprehensive business and financial information website.
www.5paisa.com is subsidiary company of India Infoline Ltd. Launched for
online trading in mid-2000. The 5paisa trading interface is one of the most
advanced platforms available to retail investor in India. The site made
available quality information and analysis - earlier restricted to a few
people - to the common man absolutely free.
The India Infoline group, comprising the holding company, India
Infoline Ltd and its wholly owned subsidiaries offers the entire gamut of
investment products ranging from Equities and derivatives trading,
Commodities trading, Portfolio Management Services, Mutual Funds, Life
Insurance, Fixed deposits, Government bonds and other small savings
instruments. India Infoline also owns and manages the websites,
www.indiainfoline.com and www.5paisa.com. India Infoline Ltd is a
company listed on both the leading stock exchanges in India namely the
Stock Exchange, Mumbai (BSE) and the National Stock Exchange (NSE).
The India Infoline group has a significant presence across the country
owing to its 125 offices across 45 cities across India. All these offices arenetworked and are connected with the corporate office in Mumbai.
Post deregulation of the insurance sector, India Infoline Ltd became
one of the first corporate agents to be licensed by IRDA and have tied up
with ICICI Prudential Life Insurance Company. ICICI Prudential Life
Insurance Company Ltd. is the leading private sector insurance player and
India Infoline ltd. is their leading corporate agent.
KEY MILESTONES
Incorporated on October 18, 1995 as Probity Research & Services
8/6/2019 Derivative Equity (1)
23/101
Launched Internet portal www.indiainfoline.com in May 1999
Commenced distribution of personal financial products like Mutual
Funds and RBI Bonds in April 2000
Launched online trading in shares and securities branded aswww.5paisa.com in July 2000
Started life insurance agency business in December 2000 as a
Corporate Agent
Launched stock messaging service in May 2003
Acquired commodities broking license in March 2004
Launched portfolio management services in August 2004
Listed on NSE and BSE on May 17, 2005
Acquired 75% stake holding in Money tree Consultancy services in
October 2005
Acquired 100% equity of Marchmont Capital Advisors Pvt. Ltd in
December 2005
DSP Merrill Lynch Capital subscribed to convertible bonds
aggregating Rs.80 crores in December 2005. Their current stake in
India Infoline is a little over 14% as on 31
st
March 2007. Bennett Coleman & Co Ltd (BCCL) invested Rs.20 crores in India
Infoline by way of preferential allotment in December 2005.
Became a depository participant of CDSL in June 2006.
Merger of India Infoline Securities Private Limited with India Infoline
Limited in January 2007.
Entered into an alliance with Bank of Baroda for Baroda for Baroda e-
trading in February 2007. IRDA license for insurance Broking in April 2007.
VISION:
Company vision is:
http://www.indiainfoline.com/http://www.indiainfoline.com/http://www.indiainfoline.com/http://www.indiainfoline.com/http://www.indiainfoline.com/http://www.5paisa.com/http://www.5paisa.com/http://www.5paisa.com/http://www.5paisa.com/http://www.5paisa.com/http://www.indiainfoline.com/http://www.5paisa.com/8/6/2019 Derivative Equity (1)
24/101
To be the premier provider of investment advisory and financial
planning services in India.
To be a leading investment intermediary for transactions through
both online and offline medium.
PUNCH LINE: ITS ALL ABOUT MONEY, HONEY!
Corporate Office:
India Infoline Ltd
Building No 75, Nirlon Complex,
Off Western Express Highway,
Goregaon (East), Mumbai - 400063
Tel : +91-22-56489000
Fax : +91-22-26850451
E Mail : apply@indiainfoline.com
Website : www.indiainfoline.com
India Infoline Group Corporate Structure
India Infoline Securities Pvt.Ltd
Equities & Derivatives Broking
Depository services
Portfolio Management Services
India Infoline .com Distribution co. Ltd.
Mutual Funds
RBI Bonds
Fixed Deposits Etc.
India Infoline Insurance Services ltd.
mailto:apply@indiainfoline.comhttp://www.indiainfoline.com/index_1024_main.shtmlmailto:apply@indiainfoline.comhttp://www.indiainfoline.com/index_1024_main.shtml8/6/2019 Derivative Equity (1)
25/101
Corporate agents for ICICI Prudential Life Insurance
Company Ltd.
India Infoline Commodities Pvt. Ltd
Commodities Broking
India Infoline Investment Services Pvt, Ltd.
Margin Funding & Financing
ABOUT INDIA INFOLINE LTD,
The India Infoline Group, comprising the holding company, India
Infoline Ltd. And its wholly all subsidiaries offer the entire gamut of
investment products ranging from Equities and Derivatives trading,
Commodities trading, Portfolio management services, Mutual Funds, Life
Insurance, Fixed Deposit, GOI bonds and other small savings instruments.
It also owns & manages websites, www.indiainfoline.com &
www.5paisa.com
India Infoline Ltd. is a company listed on both the leading stock
exchanges in India Stock Exchange Mumbai (BSE) and National Stock
Exchange (NSE) Delhi.
http://www.indiainfoline.com/http://www.5paisa.com/http://www.indiainfoline.com/http://www.5paisa.com/8/6/2019 Derivative Equity (1)
26/101
India Infoline is forerunner in the field of equity research. India
Infolines research is acknowledged by none other than Forbes as Best of
the Web a read for investors in ASIA. India Infolines research is available
not just over the internet but also on Inter National wire services like
Bloomberg.
India Infoline group has significant presence across the country
owing to its 77 offices across 36 cities across India. All these offices are
networked and connected with the corporate office in Mumbai. The group
has invested significantly in technology and research, the result of which
are there for everyone to see the 5paisa trading interface is one of the
most advanced platform available to retail investor in India.
The group has membership on BSE and NSE for equities trading and on MCX and
NCDEX for commodities trading. It has a SEBI license for Portfolio Management under
which various schemes are offered which has been consistently beating the benchmark
indices since inception.
Various software of India Infoline Ltd:
The Trader Terminal (Advance):
The TT(Advance) is the amazing software, which offers you all that
you could possibly want to trade in the Indian stock markets. With the TT
(Advance), you can trade in both, the stock Exchange, Mumbai (BSE) and
the National stock Exchange (NSE) on the same screen and also in the
segment, cash as well as Derivatives. It offers real-time streaming quotes
and Intra-day charts.
8/6/2019 Derivative Equity (1)
27/101
You can keep a watch on as many scripts as you want to with the
Market watch feature. You have online access to your DP account, your
ledger and there is also the facility to transfer funds online owing to our
tie-up with the leading Internet - enabled banks in the country. Our world
class research powers your trading with money making intra-day ideas
which are based on research which has been acknowledged by none other
than forbs as Best of the web and Must read for investors
The brokerages for online trading
Intraday trading 0.05%
Delivery 0.25%
F & O 0.05%
Odin Diet:
The Odin Diet terminal provides you with the facility to trade not
just in the Stock Exchange, Mumbai (BSE) and the National Stock
Exchange (NSE) and in the cash as well as the Derivatives segment but
also in the commodities segment in the Multi Commodity Exchange
(MCX) and the National Commodity & Derivatives Exchange (NCDEX); allon the same screen. Though it doesnt provide charting features, it
provides a cleaner interface for faster order execution, a facer well
appreciated by the true blue trader of today.
8/6/2019 Derivative Equity (1)
28/101
Strengths That Set Us Apart:
We have been in information services for the last seven
years and have assiduously built the data and skill sets necessaryfor the business.
We have leveraged our content to create the India Infoline brand,
which is synonymous with high quality and credible information on
business and finance.
Our top management team represents a skill set, which is mutually
exclusive but collectively exhaustive.
The strength of the organization has been to continuously
innovate and reinvent itself.
RESEARCH METHODOLOGY
Research Problem:
Awareness, preference and potential growth of derivative market
with special reference to equity only. This statement focuses on the
awareness of derivatives, whether people prefer to invest in derivatives or
not and along with that it also focuses on potential growth of derivatives
in future.
Objectives:
8/6/2019 Derivative Equity (1)
29/101
The sole effort behind carrying out this study was to find out what is
the growth of derivatives, awareness among people, and preference of
investors who are investing in derivatives.
1. To know awareness of derivatives among the investors.
2. To know preference of investors for investment in derivative
market.
3. To know potential growth of derivative market.
Research Design:
(A) Research Type:
I have used descriptive research design for my project.
As we are trying to study awareness, preference and potential growth of
derivative market, it shows how many people are aware about derivatives
and from them how many do actual investment in them and from them
we came to know the potential growth of derivatives market.
(B) Research Plan:
Primary data is collected through survey model. The survey is done
through questionnaire. With the help of this model we can come to know
actually what customers known and how they invest in derivatives.
(C) Sample Design:
Universe is entire group of items that researcher wishes to study
and about which help to plan to generalize. For my study the universe is
8/6/2019 Derivative Equity (1)
30/101
people who came to Bank of Baroda for opening demat a/c and investors
of India Infoline. I have used non probability convenience descriptive
sampling design.
(D) Sample Type:
The type of sampling is Non Probability convenience sampling
because the population surveyed is according to the convenience and
looking to the time and cost factors.
Data Analysis:
Data Analysis was be done using SPSS software (Stastical
Package for Social Science). This will be used because it gives us
accurate and fast result. Also multiple features of SPSS will help in
applying various tests to reach to accurate conclusions.
STATISTICAL TESTS TO BE USED
Measurement of Central Tendency:
Mean is used when data the types of data are interval, median is
used when data are ordinal and mode is used when data are Nominal
type.
One Sample T-test:
8/6/2019 Derivative Equity (1)
31/101
The One-Sample T Test is used to test whether the mean of a single
variable differs from a specified constant. The average difference
between each data value and the hypothesized test value, at test that
tests that this difference is 0, and a confidence level for this test may
either 95% or 90%. One sample T-test is used when the type of data are
INTERVAL in nature.
DATA ANALYSIS AND INTERPRETATION
Q-1 Are you aware of derivative market?
( ) Yes ( ) no
8/6/2019 Derivative Equity (1)
32/101
PARTICULAR FREQUENCY PERCENTAGEYES 75 75.00NO 25 25.00TOTAL 100 100.0
AWARENESS
YES
NO
Inference: From the graph it can be infer that out of 100 investors 75%
are aware about derivative and 25% are not aware about derivative.
Q-2 Reason for non-awareness of derivative market?
1.) Lack of Knowledge:
Particular Frequency PercentageUnmarked 96 96.0Marked 4 4.0Total 100 100.0
8/6/2019 Derivative Equity (1)
33/101
lack of knowledge
unmarked
marked
Inference: from the graph it can be inferred that most of
respondent denied that lack of knowledge is not a reason of non-
awareness.
2.) High Risk:
Particular Frequency PercentageUnmarked 82 82.0Marked 18 18.0Total 100 100.0
high risk
unmarked
marked
Inference: from the above graph it can be inferred that high risk is
one of the reason for not investing in derivative market.
3.) Huge Investment:
Particular Frequency PercentageUnmarked 78 78.0Marked 22 22.0Total 100 100.0
8/6/2019 Derivative Equity (1)
34/101
huge investment
unmarked
marked
Inference: From the graph it can be inferred that are also take
huge investment as their reason for non-awareness.
Q-3 Have you invested in derivative market?
( ) Yes ( ) No
PARTICULAR FREQUENCY PERCENTAGE
8/6/2019 Derivative Equity (1)
35/101
YES 77 77.00NO 23 23.00TOTAL 100 100.0
investment
YES
NO
Inference: from the graph it can be inferred that out of 100, 77%
are investing in derivative.
Q-4 Reason for not investing in derivative.1. High risk
Particular Frequency Percentage
Agree 3 3.0
8/6/2019 Derivative Equity (1)
36/101
Strongly agree 20 20.0
high risk
Agree
Strongly agree
Inference: from the graph, you can see that 20% people are sayingthat reason for non-investment in derivative is high risk.
T Test
One-Sample Statistics
Particular N MeanStd.
Deviation
Std.ErrorMean
4.HIGHRISK
100 1.12 2.066 .207
Null Hypothesis (HO): There is no significant difference between
calculated mean and hypothesized mean (1). In other words, wehypothesize that reason for not investing in derivative market is
high risk.
i.e. Ho : x = = 1
Alternative Hypothesis (H1): There is significant difference
between calculated mean and hypothesized mean. In other words
we hypothesize that reason for not investing in derivative market is
not high risk.
i.e. H1: x , i.e. H1: x 1
8/6/2019 Derivative Equity (1)
37/101
Statistical Test: one sample t-test is chosen because the
measurement of data is interval in nature.
Significance level: 0.05
Test Value = 1
Particular t df Sig. (2-tailed)
MeanDifference
95% ConfidenceInterval of the
DifferenceLower Upper Lower Upper Lower Upper
4.HIGHRISK
.581 99 .563 .120 -.29 .53
Inference:Here the test is performed at 95% significance level and the t-
value comes out as .563 which is grater than 0.05, it means that
the null hypothesis H0 is accepted and it can be said that there is
no significant difference between calculated mean and
hypothesized mean. It means that high risk is the reason for not
investing in derivative market.
2. Margin Money:
Particular Frequency PercentageNeutral 5 5.0
Agree 5 5.0
Strongly agree 12 12.0
8/6/2019 Derivative Equity (1)
38/101
margin money
Neutral
Agree
Strongly agree
Inference: from the graph, you can see that 12% people are saying
that reason for non-investment in derivative is margin money.
T Test
One-Sample Statistics
N MeanStd.
Deviation
Std.ErrorMean
4.MARGINMONEY
100 .88 1.707 .171
Null Hypothesis (HO): There is no significant difference between
calculated mean and hypothesized mean (1). In other words, we
hypothesize that reason for not investing in derivative market is
Margin money.
i.e. Ho : x = = 1
Alternative Hypothesis (H1): There is significant difference
between calculated mean and hypothesized mean. In other words
we hypothesize that reason for not investing in derivative market is
not margin money..i.e. H1: x , i.e. H1: x 1
Statistical Test: one sample t-test is chosen because the
measurement of data is interval in nature.
8/6/2019 Derivative Equity (1)
39/101
Significance level: 0.05
Test Value = 1
Particular t df Sig. (2-tailed)
MeanDifference
95% ConfidenceInterval of the
DifferenceLower Upper Lower Upper Lower Upper
4.MARGINMONEY
-.703 99 .484 -.120 -.46 .22
Inference:
Here the test is performed at 95% significance level and the t-
value comes out as .484 which is grater than 0.05, it means thatthe null hypothesis H0 is accepted and it can be said that there is
no significant difference between calculated mean and
hypothesized mean. It means that margin money is the reason for
not investing in derivative market.
3. Tax:
Particular Frequency PercentageStrongly
disagree
9 9.0
Disagree 3 3.0Neutral 11 11.0
8/6/2019 Derivative Equity (1)
40/101
tax
Strongly disagree
Disagree
Neutral
Inference: from the graph, you can see that 11% people are saying
that they are neutral stage.
T Test
One-Sample Statistics
Particular N Mean
Std.Deviatio
nStd. Error
Mean4.TAX 100 .48 .990 .099
One-Sample Test
Null Hypothesis (HO): There is no significant difference between
calculated mean and hypothesized mean (1). In other words, we
hypothesize that reason for not investing in derivative market is tax.
i.e. Ho : x = = 1
Alternative Hypothesis (H1): There is significant difference
between calculated mean and hypothesized mean. In other words
we hypothesize that reason for not investing in derivative market is
not margin money.
i.e. H1: x , i.e. H1: x 1
8/6/2019 Derivative Equity (1)
41/101
Statistical Test: one sample t-test is chosen because the
measurement of data is interval in nature.
Significance level: 0.05
Test Value = 1
Particular t df
Sig. (2-tailed)
MeanDifference
95% ConfidenceInterval of the
DifferenceLower Upper Lower Upper Lower Upper
4.TAX -5.254
99 .000 -.520 -.72 -.32
Inference:
Here the test is performed at 95% significance level and the t-
value comes out as .000 that is less than 0.05, it means that the
null hypothesis H0 is rejected and alternative hypothesis is
accepted.
4. Lot Size:
Particular Frequency
Percentage
Stronglydisagree
7 7.0
Disagree 3 3.0
8/6/2019 Derivative Equity (1)
42/101
Neutral 5 5.0Agree 2 2.0Stronglyagree
6 6.0
lot size
Strongly disagree
Disagree
Neutral
Agree
Strongly agree
Inference: from the graph, you can see that most of the people are
saying that reason for non-investment in derivative is not lot size.
T Test
One-Sample Statistics
Particular N Mean
Std.Deviatio
n
Std.ErrorMean
4.LOTSIZE 100 .66 1.430 .143
One-Sample Test
Null Hypothesis (HO): There is no significant difference between
calculated mean and hypothesized mean (1). In other words, we
hypothesize that reason for not investing in derivative market is Lot
size.
i.e. Ho : x = = 1
Alternative Hypothesis (H1): There is significant difference
between calculated mean and hypothesized mean. In other words
we hypothesize that reason for not investing in derivative market is
not Lot size.
8/6/2019 Derivative Equity (1)
43/101
i.e. H1: x , i.e. H1: x 1
Statistical Test: one sample t-test is chosen because the
measurement of data is interval in nature.
Significance level: 0.05
Test Value = 1
Particular t df Sig. (2-tailed)
MeanDifference
95% ConfidenceInterval of the
DifferenceLower Upper Lower Upper Lower Upper
4.LOTSIZE -2.378
99 .019 -.340 -.62 -.06
Inference:
Here the test is performed at 95% significance level and the t-
value comes out as .019 which is grater than 0.05, it means that
the null hypothesis H0 is accepted and it can be said that there is
no significant difference between calculated mean and
hypothesized mean. It means that lot size is the reason for not
investing in derivative market.
Q-5 What are the objectives of investment in derivativemarket?
1. High return
8/6/2019 Derivative Equity (1)
44/101
Particular Frequenc
y
Percent
Some what not
preferred
2 2.0
Neutral 11 11.0Some what preferred 23 23.0Most preferred 64 64.0Total 100 100.0
high return
Some w hat not
preferred
Neutral
Some w hatpreferred
Most preferred
Inference: From the graph it can be inferred that 64%people
consider high return as their objective of investing in derivative.
Measurement of Central tendency
Particular ValueMean 4.49Median 5.00Mode 5
Inference:
Mean value is 4.49 that mean most of investors take high return as
their objective of investing in derivative.
Median is 5.00 that mean investors consider high return as their
objective of investing in derivative.
8/6/2019 Derivative Equity (1)
45/101
Mode is 5.00 that mean investors take high return as their
objective of investing in derivative.
T Test
One-Sample Statistics
Particular N Mean
Std.
Deviation
Std.
Error
Mean5.HIGH
RETURN100 4.49 .772 .077
Null Hypothesis (HO): There is no significant difference between
calculated mean and hypothesized mean (5). In other words, we
hypothesize that high return is one of the objective of investing in
derivatives.
i.e. Ho : x = = 5
Alternative Hypothesis (H1): There is significant difference
between calculated mean and hypothesized mean. In other words
high return is not one of the objectives of investing in derivatives.
i.e. H1: x , i.e. H1: x 5
Statistical Test: one sample t-test is chosen because the
measurement of data is interval in nature.
Significance level: 0.05
Test Value = 5
8/6/2019 Derivative Equity (1)
46/101
Particular t df
Sig. (2-
tailed)
Mean
Differen
ce
95% Confidence
Interval of the
Difference
Lowe
r Upper Lower Upper Lower Upper5.HIGH
RETURN
-
6.60799 .000 -.510 -.66 -.36
Inference:
Here the test is performed at 95% significance level and the t-
value comes out as .000 that is less than 0.05, it means that the
null hypothesis H0 is rejected.
2. Hedge the risk:
Particulars
Frequenc
y
Percent
Some what not
preferred
4 4.0
Neutral 26 26.0Some what preferred 49 49.0Most preferred 21 21.0Total 100 100.0
HEDGE THE RISK
some w hat not
preferred
neutral
most preferred
some what
preferred
8/6/2019 Derivative Equity (1)
47/101
Inference:
From the graph it can be inferred that they are investing in
derivative because it hedge the risk.
Measurement of Central tendency
Particular ValueMean 4.15Median 4.00Mode 4
Inference:
Mean value is 4.15 that mean investors investing in derivative
because it hedges the risk.
Median is 4.00 that mean investors investing in derivative because
it hedges the risk.
Mode is 4.00 that mean investors investing in derivative because
it hedges the risk.
T Test
One-Sample Statistics
Particular N Mean
Std.
Deviatio
n
Std.
Error
Mean
5. HEDGE
RISK100 4.15 .947 .095
One-Sample Test
Null Hypothesis (HO): There is no significant difference between
8/6/2019 Derivative Equity (1)
48/101
calculated mean and hypothesized mean (4). In other words, we
hypothesize that hedge the risk is one of the objective of investing
in derivative.
i.e. Ho : x = = 4
Alternative Hypothesis (H1): There is significant difference
between calculated mean and hypothesized mean. In other words
hedge the risk is not one of the objectives of investing in derivative.
i.e. H1: x , i.e. H1: x 4
Statistical Test: one sample t-test is chosen because the
measurement of data is interval in nature.
Significance level: 0.05
Test Value = 4
Particular T df
Sig. (2-
tailed)
Mean
Differenc
e
95%
Confidence
Interval of the
Difference
Lowe
r Upper Lower Upper Lower Upper5. HEDGE
RISK1.584 99 .116 .150 -.04 .34
Inference:
8/6/2019 Derivative Equity (1)
49/101
Here the test is performed at 95% significance level and the t-
value comes out as .116 which is grater than 0.05, it means that
the null hypothesis H0 is accepted and it can be said that there is
no significant difference between calculated mean and
hypothesized mean. It means that investors investing in derivative
because it hedge the risk.
3. More reliable:
Particular
Frequency Percentage
Least Preferred 4 4.00Some what not preferred 6 6.00Neutral 43 43.00Some what preferred 35 35.00Most preferred 12 12.00Total 100 100.0
MORE RELIABLE
Least Preferred
Some w hat not
preferred
Neutral
Some w hat
preferred
Most preferred
Inference:
From the graph it can be inferred that investors are at neutral
stage when we say that more reliable is one of the objective for
investing in derivative.
8/6/2019 Derivative Equity (1)
50/101
Measurement of Central tendency
Particular Value
Mean 3.45Median 3.00Mode 3
Inference:
Mean value is 3.45 that mean investors are at neutral when we say
that investing in derivative is more reliable.
Median is 3.00 that mean investors are at neutral when we saythat investing in derivative is more reliable.
Mode is 3.00 that mean investors are at neutral when we say that
investing in derivative is more reliable.
T Test
One-Sample Statistics
Particular N Mean
Std.
Deviation
Std.Error
Mean5.MORE
RELIABLE100 3.45 .925 .093
One-Sample Test
Null Hypothesis (HO): There is no significant difference betweencalculated mean and hypothesized mean (3). In other words, we
hypothesize that investors are agree that they are investing
because derivative are more reliable.
i.e. Ho : x = = 3
8/6/2019 Derivative Equity (1)
51/101
Alternative Hypothesis (H1): There is significant difference
between calculated mean and hypothesized mean. In other words,
we hypothesize that investors are not agree that they are investing
because derivative are more reliable.
i.e. H1: x , i.e. H1: x 3
Statistical Test: one sample t-test is chosen because the
measurement of data is interval in nature.
Significance level: 0.05
Test Value = 3
Particular T df
Sig. (2-
tailed)
Mean
Differen
ce
95% Confidence
Interval of the
Difference
Lowe
r Upper Lower Upper Lower Upper5.MORE
RELIABLE4.864 99 .000 .450 .27 .63
Inference:
Here the test is performed at 95% significance level and
the t-value comes out as .000 that is less than 0.05, it means that
the null hypothesis H0 is rejected.
T Test
One-Sample Statistics
Particular N Mean Std.
Deviation
Std.
Error
8/6/2019 Derivative Equity (1)
52/101
Mean5.MORE
RELIABLE100 3.45 .925 .093
One-Sample Test
Null Hypothesis (HO): There is no significant difference between
calculated mean and hypothesized mean (4). In other words, we
hypothesize that investors are agree that they are investing
because derivative are more reliable.
i.e. Ho : x = = 4
Alternative Hypothesis (H1): There is significant difference
between calculated mean and hypothesized mean. In other words,
we hypothesize that investors are not agree that they are investing
because derivative are more reliable.
i.e. H1: x , i.e. H1: x 4
Statistical Test: one sample t-test is chosen because the
measurement of data is interval in nature.
Significance level: 0.05
Test Value = 4
Particular T df Sig. (2-tailed)
MeanDifferen
ce
95% ConfidenceInterval of the
Difference
Lower Upper Lower Upper Lower Upper5.MORERELIABLE
-5.944 99 .000 -.550 -.73 -.37
8/6/2019 Derivative Equity (1)
53/101
Inference:
Here the test is performed at 95% significance level and
the t-value comes out as .000 that is less than 0.05, it means that
the null hypothesis H0 is rejected.
4. Safe to invest:
Particular
Frequency Percentage
Least Preferred 8 8.00Some what not preferred 27 27.00Neutral 38 38.00
Some what preferred 15 15.00Most preferred 12 12.00Total 100 100.0
SAFE TO INVEST
Least Preferred
Some w hat not
preferred
Neutral
Some w hatpreferred
Most preferred
Inference:
8/6/2019 Derivative Equity (1)
54/101
From the graph it can be inferred that investors are at neutral
stage when we say that derivative are safe to invest.
Measurement of Central tendency
Particular ValueMean 2.96Median 3.00Mode 3
Inference:
Mean value is 2.96 that mean investors are at neutral stage whenwe say that derivatives are safe to invest.
Median is 3.00 that mean investors are at neutral stage when we
say that derivatives are safe to invest.
Mode is 3.00 that mean investors are at neutral stage when we say
that derivatives are safe to invest.
T TestOne-Sample Statistics
Particular N Mean
Std.
Deviation
Std.
Error
Mean5.SAFE INV. 100 2.96 1.109 .111
One-Sample Test
Null Hypothesis (HO): There is no significant difference between
calculated mean and hypothesized mean (3). In other words, we
8/6/2019 Derivative Equity (1)
55/101
hypothesize that investors are investing because derivatives are
safe to invest.
i.e. Ho : x = = 3
Alternative Hypothesis (H1): There is significant difference
between calculated mean and hypothesized mean. In other words
they are not believe that derivative are safe to invest.
i.e. H1: x , i.e. H1: x 3
Statistical Test: one sample t-test is chosen because the
measurement of data is interval in nature.
Significance level: 0.05
Test Value = 3
Particular t df
Sig. (2-
tailed)
Mean
Differen
ce
95% Confidence
Interval of the
Difference
Lower Upper5.SAFE
INV.-.361 99 .719 -.040 -.26 .18
Inference:
Here the test is performed at 95% significance level and the t-
value comes out as .719 which is grater than 0.05, it means that
the null hypothesis H0 is accepted and it can be said that there is
no significant difference between calculated mean and
hypothesized mean. It means that investors are at neutral stage
when we say that derivative is safe to invest.
8/6/2019 Derivative Equity (1)
56/101
5. More liquid:
Particular
Frequency Percentage
Least Preferred 20 20.00Some what not preferred 12 12.00Neutral 39 39.00Some what preferred 12 12.00Most preferred 17 17.00Total 100 100.0
MORE LIQUID
Particular
Least Preferred
Some what notpreferred
Neutral
Some what preferred
Most preferred
Inference:
From the graph it can be inferred that investors are at neutral
stage in considering more liquid as an objective of investing in
derivatives.
Measurement of Central tendency
8/6/2019 Derivative Equity (1)
57/101
Particular ValueMean 2.94Median 3.00Mode 3
Inference:
Mean value is 2.94 that mean investors are at neutral stage when
we say that derivatives are more liquid.
Median is 3.00 that mean investors are at neutral stage when we
say that derivatives are more liquid.
Mode is 3.00 that mean investors are at neutral stage when we say
that derivatives are more liquid.
T Test
One-Sample Statistics
Particular N Mean
Std.
Deviation
Std.
Error
Mean5.MORE
LIQUID100 2.94 1.317 .132
One-Sample Test
Null Hypothesis (HO): There is no significant difference between
calculated mean and hypothesized mean (3). In other words, wehypothesize that investors are investing in derivative due to its
liquidity.
i.e. Ho : x = = 3
8/6/2019 Derivative Equity (1)
58/101
Alternative Hypothesis (H1): There is significant difference
between calculated mean and hypothesized mean. In other words
we hypothesize that investors are investing in derivative are not
liquid.
i.e. H1: x , i.e. H1: x 3
Statistical Test: one sample t-test is chosen because the
measurement of data is interval in nature.
Significance level: 0.05
Test Value = 3
Particular t df
Sig. (2-
tailed)
Mean
Differen
ce
95% Confidence
Interval of the
Difference
Lower Upper5.MORE
LIQUID-.456 99 .650 -.060 -.32 .20
Inference:
Here the test is performed at 95% significance level and the t-
value comes out as .650 which is grater than 0.05, it means that
the null hypothesis H0 is accepted and it can be said that there is
no significant difference between calculated mean and
hypothesized mean. It means that investors are at neutral stage
when we say that derivative is more liquid.
8/6/2019 Derivative Equity (1)
59/101
Q 6 give your preference of investment in derivative
instrument.
1.) Index future:
Particular
Frequency Percentage
Some what not preferred 3 3.00Neutral 14 14.00Some what preferred 21 21.00Most preferred 62 62.00
Total 100 100.0
INDEX FUTURE
Some w hat not
preferred
Neutral
Some w hat
preferred
Most preferred
Inference:
From the graph it can be inferred that most of the investors
are prefer to invest in Index future.
Measurement of Central tendency
Particular ValueMean 4.42Median 5.00Mode 5
Inference:
8/6/2019 Derivative Equity (1)
60/101
Mean value is 4.42 that mean investors are most preferred to
invest in Index future.
Median is 5.00 that mean investors are most preferred to invest in
Index future.
Mode is 5.00 that mean investors are most preferred to invest in
Index future.
T Test
One-Sample Statistics
Particular N Mean
Std.
Deviation
Std.
Error
Mean6.INDEX
FUTURE100 4.42 .843 .084
One-Sample Test
Null Hypothesis (HO): There is no significant difference between
calculated mean and hypothesized mean (5). In other words, we
hypothesize that investors prefer to invest in Index future.
i.e. Ho : x = = 5
Alternative Hypothesis (H1): There is significant difference
between calculated mean and hypothesized mean. In other words,
investors will not prefer to invest in Index future.
i.e. H1: x , i.e. H1: x 5
8/6/2019 Derivative Equity (1)
61/101
Statistical Test: one sample t-test is chosen because the
measurement of data is interval in nature.
Significance level: 0.05
Test Value = 5
Particular T df
Sig. (2-
tailed)
Mean
Differen
ce
95% Confidence
Interval of the
Difference
Lowe
r Upper Lower Upper Lower Upper6.INDEX
FUTURE
-
6.88099 .000 -.580 -.75 -.41
Inference:
Here the test is performed at 95% significance level and the t-
value comes out as .000 that is less than 0.05, it means that the
null hypothesis H0 is rejected. It can be said that there is significant
difference between calculated mean and hypothesized mean.
T Test
One-Sample Statistics
Particular N Mean
Std.
Deviation
Std.
Error
Mean6.INDEX
FUTURE 100 4.42 .843 .084
One-Sample Test
Null Hypothesis (HO): There is no significant difference between
8/6/2019 Derivative Equity (1)
62/101
calculated mean and hypothesized mean (4). In other words, we
hypothesize that investors prefer to invest in Index future.
i.e. Ho : x = = 4
Alternative Hypothesis (H1): There is significant difference
between calculated mean and hypothesized mean. In other words,
investors will not prefer to invest in Index future.
i.e. H1: x , i.e. H1: x 4
Statistical Test: one sample t-test is chosen because the
measurement of data is interval in nature.
Significance level: 0.05
Test Value = 4
Particular T df Sig. (2-tailed)
MeanDifferen
ce
95% ConfidenceInterval of the
Difference
Lowe
r Upper Lower Upper Lower Upper6.INDEX
FUTURE 4.982 99 .000 .420 .25 .59
Inference:
Here the test is performed at 95% significance level and the t-
value comes out as .000 that is less than 0.05, it means that the
null hypothesis H0 is rejected. It can be said that there is significant
difference between calculated mean and hypothesized mean.
1. Stock future:
8/6/2019 Derivative Equity (1)
63/101
Particular
Frequency Percentage
Least Preferred 5 5.00Some what not preferred 13 13.00Neutral 25 39.00Some what preferred 43 43.00Most preferred 14 14.00Total 100 100.0
STOCK FUTURELeast Preferred
Some w hat not
preferred
Neutral
Some what
preferred
Most preferred
Inference:
From the above graph it can be inferred that Stock future is
some what preferred by the investors.
Measurement of Central tendency
Particular ValueMean 3.48Median 4.00Mode 4
Inference:
Mean value is 3.48 that mean investors are somewhat preferred to
invest in stock future.
Median is 4.00 that mean investors are somewhat preferred to
invest in stock future.
8/6/2019 Derivative Equity (1)
64/101
Mode is 4.00 that mean investors are somewhat preferred to
invest in stock future.
T Test
One-Sample Statistics
Particular N Mean
Std.
Deviation
Std.
Error
Mean6.STOCK
FUTURE100 3.48 1.049 .105
One-Sample Test
Null Hypothesis (HO): There is no significant difference between
calculated mean and hypothesized mean (4). In other words, we
hypothesize that investors prefer to invest in stock future.
i.e. Ho : x = = 4
Alternative Hypothesis (H1): There is significant difference
between calculated mean and hypothesized mean. In other words,
investors will not prefer to invest in stock future.
i.e. H1: x , i.e. H1: x 4
Statistical Test: one sample t-test is chosen because the
measurement of data is interval in nature.
Significance level: 0.05
Test Value = 4
8/6/2019 Derivative Equity (1)
65/101
Particular t df
Sig. (2-
tailed)
Mean
Differen
ce
95% Confidence
Interval of the
Difference
Lower Upper6.STOCK
FUTURE
-
4.95799 .000 -.520 -.73 -.31
Inference:
Here the test is performed at 95% significance level and the t-
value comes out as .000 that is less than 0.05, it means that the
null hypothesis H0 is rejected. It can be said that there is significant
difference between calculated mean and hypothesized mean.
T Test
One-Sample Statistics
Particular N Mean
Std.
Deviation
Std.
Error
Mean6.STOCK
FUTURE100 3.48 1.049 .105
One-Sample Test
Null Hypothesis (HO): There is no significant difference between
calculated mean and hypothesized mean (4). In other words, we
hypothesize that investors prefer to invest in stock future.
i.e. Ho : x = = 4
Alternative Hypothesis (H1): There is significant difference
between calculated mean and hypothesized mean. In other words,
investors will not prefer to invest in stock future.
8/6/2019 Derivative Equity (1)
66/101
i.e. H1: x , i.e. H1: x 4
Statistical Test: one sample t-test is chosen because the
measurement of data is interval in nature.
Significance level: 0.05
Test Value = 4
Particular T df
Sig.(2-
tailed)
MeanDifferen
ce
95% ConfidenceInterval of the
Difference
Lower Upper Lower Upper Lower Upper6.STOCK
FUTURE-4.957 99 .000 -.520 -.73 -.31
Inference:
Here the test is performed at 95% significance level and the t-
value comes out as .000 that is less than 0.05, it means that the
null hypothesis H0 is rejected. It can be said that there is significant
difference between calculated mean and hypothesized mean.
2. Index option:
Particular
Frequency Percentage
Least Preferred 1 1.00Some what not preferred 3 1.00
Neutral 22 22.00Some what preferred 48 48.00Most preferred 26 26.00Total 100 100.0
8/6/2019 Derivative Equity (1)
67/101
INDEX OPTION
Least Preferred
Some w hat not
preferred
Neutral
Some w hat
preferred
Most preferred
Inference:
From the above graph it can be inferred that most of the
investors some what preferredto invest in Index option.
Measurement of Central tendency
Particular ValueMean 4.17Median 4.00
Inference:
Mean value is 4.17 that mean investors are somewhat preferred to
invest in stock future.
Median is 4.00 that mean investors are somewhat preferred to
invest in stock future.
T Test
One-Sample Statistics
Particular N Mean
Std.
Deviation
Std.
Error
Mean6.INDEX 100 4.17 .943 .094
8/6/2019 Derivative Equity (1)
68/101
OPTION
One-Sample Test
Null Hypothesis (HO): There is no significant difference between
calculated mean and hypothesized mean (4). In other words, we
hypothesize that investors are somewhat preferred to invest in
Index option.
i.e. Ho : x = = 4
Alternative Hypothesis (H1): There is significant differencebetween calculated mean and hypothesized mean. In other words
we hypothesize that investors are not somewhat preferred to invest
in Index option.
i.e. H1: x , i.e. H1: x 4
Statistical Test: one sample t-test is chosen because the
measurement of data is interval in nature.
Significance level: 0.05
Test Value = 4
Particular T df
Sig. (2-
tailed)
Mean
Differen
ce
95% Confidence
Interval of the
Difference
Lowe
r Upper Lower Upper Lower Upper6.INDEX
OPTION1.802 99 .075 .170 -.02 .36
Inference:
8/6/2019 Derivative Equity (1)
69/101
Here the test is performed at 95% significance level and the t-
value comes out as .075 which is grater than 0.05, it means that
the null hypothesis H0 is accepted and it can be said that there is
no significant difference between calculated mean and
hypothesized mean. It means that investors are some what
preferred to invest in Index option.
3. Stock option:
Particular
Frequency Percentage
Least Preferred 7 7.00Some what not preferred 15 15.00Neutral 25 25.00Some what preferred 28 28.00Most preferred 25 25.00Total 100 100.0
8/6/2019 Derivative Equity (1)
70/101
STOCK OPTION
Least Preferred
Some w hat not
preferred
Neutral
Some w hat
preferred
Most preferred
Inference:
From the graph it can be inferred that investors are somewhat
preferred to invest in stock option.
Measurement of Central tendency
Particular ValueMean 3.49Median 4.00Mode 4
Inference:
Mean value is 3.49 that mean investors are somewhat preferred to
invest in stock option.
Median is 4.00 that mean investors are somewhat preferred to
invest in stock option.
Mode is 4.00 that mean investors are somewhat preferred to
invest in stock option.
T Test
One-Sample Statistics
Particular N Mean Std. Std.
8/6/2019 Derivative Equity (1)
71/101
Deviation
Error
Mean6.STOCK
OPTION100 3.49 1.219 .122
One-Sample Test
Null Hypothesis (HO): There is no significant difference between
calculated mean and hypothesized mean (4). In other words, we
hypothesize those investors prefer to invest in Stock option.
I.e. Ho : x = = 4
Alternative Hypothesis (H1): There is significant difference
between calculated mean and hypothesized mean. In other words
we hypothesize that investors are not prefer to invest in Stock
option.
i.e. H1: x , i.e. H1: x 4
Statistical Test: one sample t-test is chosen because the
measurement of data is interval in nature.
Significance level: 0.05
Test Value = 4
Particular T df
Sig. (2-
tailed)
Mean
Differen
ce
95% Confidence
Interval of the
Difference
Lowe
r Upper Lower Upper Lower Upper6.STOCK
OPTION
-
4.18599 .000 -.510 -.75 -.27
8/6/2019 Derivative Equity (1)
72/101
Inference:
Here the test is performed at 95% significance level and the t-
value comes out as .000 that is less than 0.05, it means that the
null hypothesis H0 is rejected. It can be said that there is significant
difference between calculated mean and hypothesized mean.
T Test
One-Sample Statistics
Particular N Mean
Std.
Deviation
Std.
Error
Mean6.STOCK
OPTION100 3.49 1.219 .122
One-Sample Test
Null Hypothesis (HO): There is no significant difference between
calculated mean and hypothesized mean (3). In other words, we
hypothesize that investors prefer to invest in Stock option.
I.e. Ho : x = = 3
Alternative Hypothesis (H1): There is significant difference
between calculated mean and hypothesized mean. In other words
we hypothesize that investors are not prefer to invest in Stock
option.
i.e. H1: x , i.e. H1: x 3
8/6/2019 Derivative Equity (1)
73/101
Statistical Test: one sample t-test is chosen because the
measurement of data is interval in nature.
Significance level: 0.05
Test Value = 3
Particular T df Sig. (2-tailed)
MeanDifference
95% ConfidenceInterval of the
Difference
Lower Upper LowerUppe
r Lower Upper6.STOCKOPTION
4.021 99 .000 .490 .25 .73
Inference:
Here the test is performed at 95% significance level and the t-
value comes out as .000 that is less than 0.05, it means that the
null hypothesis H0 is rejected. It can be said that there is significant
difference between calculated mean and hypothesized mean.
Q 7 Give your preference in terms of investment inderivative market.
1. Short term:
Particular Frequency
Percentage
Least preferred 6 6.0Some what notpreferred
5 5.0
Neutral 18 18.0Some what preferred 12 12.0Most preferred 59 59.0Total 100 100.0
8/6/2019 Derivative Equity (1)
74/101
short term
Least preferred
Some w hat not
preferred
Neutral
Some w hat preferred
Most preferred
Inference:
From the graph it can be inferred that people prefer to invest
for short period of time.
Measurement of Central tendency
Particular ValueMean 4.13Median 5.00Mode 5
Inference:
Mean value is 4.13 that mean investors are somewhat preferred to
invest for short time.
Median is 5.00 that mean investors are most preferred to invest
for short time.
Mode is 5.00 that mean investors are most preferred to invest for
short time.
T Test
One-Sample Statistics
8/6/2019 Derivative Equity (1)
75/101
Particular N Mean
Std.
Deviation
Std.
Error
Mean7.SHORT
TERM 100 4.13 1.228 .123
One-Sample Test
Null Hypothesis (HO): There is no significant difference between
calculated mean and hypothesized mean (4). In other words, we
hypothesize that investors are somewhat preferred to invest for
short time.
I.e. Ho : x = = 4
Alternative Hypothesis (H1): There is significant difference
between calculated mean and hypothesized mean. In other words
we hypothesize that investors are not somewhat preferred to invest
for short time.
i.e. H1: x , i.e. H1: x 4
Statistical Test: one sample t-test is chosen because the
measurement of data is interval in nature.
Significance level: 0.05
Test Value = 4
Particular T df
Sig. (2-
tailed)
Mean
Differe
nce
95% Confidence
Interval of the
Difference
8/6/2019 Derivative Equity (1)
76/101
Lowe
r Upper Lower Upper Lower Upper7.SHORT
TERM1.059 99 .292 .130 -.11 .37
Inference:
Here the test is performed at 95% significance level and the t-
value comes out as .292 which is grater than 0.05, it means that
the null hypothesis H0 is accepted and it can be said that there is
no significant difference between calculated mean and
hypothesized mean. It means that investors are somewhat
preferred to invest for short time.
2. Medium term:
Particular
Frequency Percentage
Least Preferred 7 7.00Some what not preferred 3 3.00Neutral 49 49.00Some what preferred 38 38.00Most preferred 3 3.00Total 100 100.0
8/6/2019 Derivative Equity (1)
77/101
MEDIUM TERM
Least Preferred
Some w hat not
preferred
Neutral
Some w hat
preferred
Most preferred
Inference:
From the above graph it can be inferred that most of the investors
are neutral stage to invest for short time.
Measurement of Central tendency:
Particular ValueMean 3.27Median 3.00Mode 3
Inference:
Mean value is 3.27 that mean investors are at neutral stage to
invest for medium term.
Median is 3.00 that mean investors are at neutral stage to invest
for medium term.
Mode is 3.00 that mean investors are at neutral stage to invest for
medium term.
T Test
One-Sample Statistics
8/6/2019 Derivative Equity (1)
78/101
Particular N Mean
Std.
Deviatio
n
Std.
Error
Mean7.MEDIUM
TERM 100 3.27 .863 .086
One-Sample Test
Null Hypothesis (HO): There is no significant difference between
calculated mean and hypothesized mean (3). In other words, we
hypothesize that investors are at neutral stage to invest for medium
term.
I.e. Ho : x = = 3
Alternative Hypothesis (H1): There is significant difference
between calculated mean and hypothesized mean. In other words
we hypothesize that investors are not at neutral stage to invest for
medium term.
i.e. H1: x , i.e. H1: x 3
Statistical Test: one sample t-test is chosen because the
measurement of data is interval in nature.
Significance level: 0.05
Test Value = 3
Particular T df
Sig. (2-
tailed)
Mean
Differ
ence
95% Confidence
Interval of the
Difference
Lowe
r Upper Lower
Uppe
r Lower Upper
8/6/2019 Derivative Equity (1)
79/101
7.MEDIUM
TERM3.129 99 .002 .270 .10 .44
Inference:
Here the test is performed at 95% significance level and the
p-value comes out as .002 that is less than 0.05, it means that the
null hypothesis H0 is rejected. It can be said that there is significant
difference between calculated mean and hypothesized mean. It
means that investors are not at neutral stage to invest for medium
term.
3. Long Term:
Particular Frequency Percentageleast preferred 11 11.0some what not preferred 4 4.0Neutral 29 29.0some what preferred 23 23.0most preferred 33 33.0Total 100 100.0
8/6/2019 Derivative Equity (1)
80/101
long term
least preferred
some w hat not
preferred
neutral
some w hat
preferred
most preferred
Inference:
From the graph it can be inferred that investors prefer to
invest for long period of time.
Measurement of Central tendency:
Particular ValueMean 3.63Median 4.00
Inference:
Mean value is 3.63 that mean investors are at neutral stage to
invest for long term.
Median is 4.00 that mean investors are at some what not prefer
stage to invest for medium term.
T Test
One-Sample Statistics
Particular N MeanStd.
Deviation
Std.ErrorMean
7.LONG 100 3.63 1.284 .128
8/6/2019 Derivative Equity (1)
81/101
TERM
One-Sample Test
Null Hypothesis (HO): There is no significant difference between
calculated mean and hypothesized mean (3). In other words, we
hypothesize that
Recommended