Essay Derivatives Users in Pakistan

The derivatives program was reducing risk when the firm was investing in foreign currency futures for the first four months from the implementation date (February 1991 to May 1991). This is seen by the negative correlation of (0.94226594) between the derivative (futures) cash flow and the unhedged cash flow. A purpose of a perfect hedge is to obtain a net of zero or in other words, reduce your risk to nothing not including the cost of the hedge. If a correlation is negative, as it was for the first three

Sharia law is an ancient compilation of religious rules that most Muslim nations seek reference in governing their people. Also defined as Islamic law, the essence of sharia laws emanated from the life of Prophet Mohammed known as the hadiths as well as the Quran teachings. The hadiths entail the vocal expressions of prophet Muhammad on divine life and his condemnation of immoral behavior that undermine the acceptable way of life. The teachings are accepted by the Muslim community who affirm that Muhammad’s teachings supplement the functionality of the Quran. On the other hand, the Quran, which forms the core reference on Muslim beliefs and regulations provides moral and spiritual guidance among the Muslims. It also dictates how the Muslims should interact with the non-Muslim community without contravening on the sharia doctrines (Hallaq 20-25).

* Stock prices change only when there is new info- cannot be predicted ahead of time

Not many years back, the dimension of the international stock market was marked at about less than 50 trillion dollars! The accrued worldwide derivatives bazaar has been retorted to be at about twenty times that number! This

A Mutual fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciations realized by the scheme are shared by its unit holders in proportion to the number of units owned by the (pro rata). Thus a Mutual fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed portfolio at a relatively low cost. Anybody with an inventible surplus of as a few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined investment objective and strategy.

Capital market is a form part of economy of any country and its behaviour has a significant impact on the economy of such country. Stock price indices are considered as capital market barometer which reflects the overall condition of capital market in any country. The flagship Indian stock price index ‘S&P BSE SENSEX’, Popularly known as ‘BSE 30’ or ‘BSE SENSEX’, is a free-float market-weighted stock market index which comprises of 30 renowned and financially stable companies listed in Bombay Stock Exchange. The 30 companies which are listed in Bombay Stock Exchange under ‘BSE 30’ are the market leaders in various business sectors and also mostly active traded stocks in Indian stock market. From the very beginning, BSE SENSEX is considered as the

There are various investment opportunities available today in financial market for an investor to avail and earn returns. An investor has different options available today ranging from bank deposits, debentures, fixed income, etc. where there is low risk as well as low return; to equity market having a higher return to higher relative risk. Mutual Fund is an investment scheme which pools money from investors to invest in a diversified portfolio of stocks. Every investor wants to invest in that investment where risk minimized and the return of investment maximized. Mutual funds investment is becoming significant all over the world and its popularity and demand is rising steadily (Nazir & Nawaz, 2010).Mutual funds in Pakistan are created and managed by Asset Management Companies and regulated by Securities and Exchage Comission of Pakistan. The investor purchase share with in the fund however the quantity of shares in issue varies consistent with demand,thus the term open ended.This implies that the value of share reflects the underlying net asset value

Also called the “Big Board”, it is the largest stock exchange in the world in terms of dollar volume and second largest in terms of number of companies listed. The Tokyo stock exchange was established on May 15, 1878 and trading began on June 1, 1878. In 1943, the exchange was combined with ten other stock exchanges in major Japanese cities to form a single Japanese Stock Exchange. It is the second largest stock exchange market in terms of monetary volume and currently has 2302 listed companies. The Hong Kong stock exchange is the 8th largest stock exchange in the world in terms of Market capitalization. The Hang Sang Index (HIS), was started on November 24, 1969. The Russian stock exchange was established in 1995 by consolidating the separate regional stock exchanges into one uniformly regulated trading floor. The Korea stock exchange was created by the integration of the three existing of the Korean Spots and Futures exchanges (Korean stock exchange, Korean futures exchange & KOSDAQ) under the Korea Stock and Futures Exchange Act.3.5. In this paper, the names of the countries and the names of the indices of those countries have been used interchangeably. Thus, the names of the countries represent the indices for the

Barclays of the future, according to their chief executive Antony Jenkins, will be a focused international bank with four core businesses, namely Personal and Corporate, Barclaycard, Africa, and Investment Bank. Each core business will be balanced and strive to win in its field of operation. This paper will investigate several theoretical financial principles and their applications by Barclays. Special emphasis will be on Investment Banking and Wealth management services of the bank. These are the divisions in Barclays that handle markets and are involved in the trading of stocks, bonds, commodities, forex, interest rates and market indexes. Trading in derivatives is commonly employed by Barclays to hedge risks, but we will see that the fund managers in the last decades exposed the bank to risks by indulging in huge speculative investments. Let us investigate a few financial principles now.

Petrodollar flows have been among the major factors supporting the growth of the Islamic finance industry ever since the 1960s GIFF (2010). The rising petrodollar flows in global markets imply continued and increasing petrodollar investments in the Islamic finance sector. This has led to a surge of interest in the Islamic Finance sector, with more and more countries positioning themselves as strategic locations to tap into part of this abundant pool of funds. For instance, a number of countries worldwide have announced their plans to issue Sukuk (Islamic bonds) and thus meet their financing needs by attracting high net worth investors (HNWIs) and wealth from the Middle East region. HNWIs are particularly on the look-out for efficient and secure jurisdictions for investing their funds, more so in the context of the present economic downturn . Operating in a facilitative business environment and reducing cost of operations are deemed instrumental factors for market players. Accordingly, a number of jurisdictions have actively encouraged the development of their Islamic capital markets as a key strategy for attracting both HNWIs and Islamic finance businesses . In particular, it has been observed that jurisdictions from across the world are developing their Islamic capital markets by utilising the efficiency provided by Offshore Financial Centres (OFCs) to structure Shari’ah compliant products which adhere to the

Islamic financial institutions are growing faster all around the world. Most in Muslim countries, conventional and Islamic financial institutions exist side by side, interacting with one another. The development of Islamic financial institutions has the potential to play a leading role in serving the Muslim Ummah and contribute towards socio-economic development of Muslim countries in conformity with Islamic sensibilities.

Capital market play vital role in financial growth. Mutual fund is one of the securitization vehicles that commonly practice in today’s modern economics environment. Levy and Post (2005) mentioned investors, regardless of the type of investment they choose, have one common goal which is to get return out of their investment. Investors often have risk and return trade-off in determining their desire return. Thus, it is important to understand the financial stance of the investors in order to determine types of investments that suit them. This essay’s aim first to discuss 2 types of mutual funds, open end and close end investment. Going further is to relate them with the emerging Muslim’s economy conditions. It is believed that Muslim’s economy is way far behind due to their weakness in the capital market. Honohan (2008) discovered more than 70% Muslims do not utilize financial services due to their concern of the financial instrument principle which seems to them contradict with the Islamic law. Second to suggest the type of funds that suitable for the emerging Muslims economy in order to promote social wealth and long-suffered poverty issues amongst the country.

There are main two types of mutual funds are available open end and closed end funds for the Pakistani investors. Close End mutual funds are traded in stock exchange, directly every investor can buy or sell these funds in the stock market. Prices of these funds are determined on the basis of demand and supply of the shares rather than net assets value in case of closed end mutual funds.

In this process, Indian mutual funds have emerged as strong financial intermediaries and are playing a very important role in bringing stability to the financial system and efficiency to resource allocation Mutual funds have opened new vistas to investors and imparted much-needed liquidity to the system.

The purpose of this report is to give a detailed analysis on a case study of Padi-Cepat. Padi-Cepat is a Malaysian Company dealing with food, beverages and baking products. Norman Effendi, CEO of the company is more concerned about the future of the company as the company is sliding down and he wants to take an effective strategy for improving the performance of the company. Padi- Cepat mainly targeted on middle and lower income groups. Different options for solving the issue of growth problem are put forward by the senior officials. The options are Greenfield Option, Market potential the Australasian region, exporting option and diversification option. The managers have proposed diversification strategy and launching a new business segment in Malaysia focusing on selling hot and cold beverages with cake, pastries etc. The managers predict that this market has significant potential to attract the middle and lower income customers because other international coffee chains in Malaysia only target high-income groups and the restaurants do no not have their own marketing products. They rely more on external suppliers for their selling. Norman has to choose any of these options for enhancing the company’s growth and he knows that if the company did not expand internationally, the local rivals would beat the company. Hence he decided to choose the diversification strategy for enhancing the company’s growth.