Earlier Women of the Twentieth Century Essay Example for Free

Earlier Women of the Twentieth Century Essay The essay is based on the examination of discourses concerning the establishment of women and analysis of shifting patterns of child care within households in the opening decades of the early twentieth century, this study argues that although household divisions of labour by gender and age existed in early modern era, a more rigid female specialization in certain types of domestic work in housekeeping and child-rearing as opposed to childbearing and expected participation in more varied forms of productive labour developed during the modern era, especially for young married women. Beginning with the middle-class concern, women started loosing their morals towards family and children. It was due to the changing attitude of women that children that once were considered dependents and consumers became income earners and productive workers in their households. A number of recent studies of colonial Spanish and Portuguese America, for instance, have demonstrated that European notions of family honour and sexual morality were adapted in specific ways to the American colonies. Commoners in early modern Spain who testified before the Inquisition resisted the idea that it was sinful to have consensual sexual relations with prostitutes or non-virgin single women. This attitude was probably common in Portugal as well. Resistance to the church’s moral prescriptions grew considerably in the Americas, where European men frequently considered it their right to take Indian or African women, and equated their status with that of single women, regardless of their virginity, previous marriage, or the terms of their consent. (Caulfield, 2000, p. 5) In contrast, for elite families in Brazil and throughout Spanish and Portuguese America marriage alliances were crucial political and economic strategies up to the nineteenth century and even later in some areas. (Caulfield, 2000, p. 6) Parents chose children’s, especially daughters’, marriage partners with care. Legitimate birth and ‘purity of blood’ which came to mean the absence of African and Indian heritage was essential elements of status, and hence family honour, although ‘stains’ could often be washed away with money. Tremendous value was placed on the sexual chastity of privileged colonial women, who were generally considered white. Elite women’s seclusion not only marked them as morally superior to common women in the eyes of their peers but, also ensured the endogamy of their class and race. Scholars disagree about how to interpret this social reality, for both the colonial period and later. Some point to the high numbers of consensual unions, illegitimate children, and female-headed households to argue that the popular classes developed a set of alternative moral values in which patriarchal notions of family, women’s subordination, and the moral ideals of marriage and women’s chastity were relatively unimportant. An existence passed almost entirely within the confines of the domestic sphere, as was the case for the majority of the women interviewed, favours the recollection of events and deeds associated with that area of activity. So it is not surprising that they supplied often very precise details about daily life, more than their husbands would have been able to do, right down to the price of groceries and their husbands’ wages during the early years of their marriage. (Caulfield, 2000, p. 56) This â€Å"family memory† does not, however, operate according to the same dates or points of reference as does official history. On many occasions during the course of the interviews, the framework of events was reconstructed around the years when children were born, a close relative died or a move took place. The women were questioned more about how they had lived rather than what they had witnessed of the events which took place around them, an approach which, in theory, minimizes the risk of mistakes or oversights. We ought not, however, overlook the fact that respondents generally attempt to preserve the image they have of themselves or of the group to which they belong. This image refers to a socially and sexually oriented construction, but one whose elements may change according to the historical period. Even if these variations alter what was taboo into what is now acceptable, behaviours that were deemed deviant in previous years-premarital pregnancy, for example-can be more difficult to ascertain. Despite present-day tolerance of behaviour of this kind, the person being questioned knows that she transgressed the norm that was in force at the time and may still feel so embarrassed that she seeks to disguise the fact, even if it means lying about the date of her marriage or the year her first child was born. According to Uno (1999) â€Å"Rather than a deliberate and conscious lie, experience reveals that omissions and evasive responses are the means used to avoid an embarrassing question that has revived painful memories†. (Uno, 1999, p. 74) Whether conscious or not, these â€Å"oversights† and â€Å"mistakes† are as significant as the memory of an event and ought to be submitted to analysis when they can be identified. Even if parents were generally content to exercise a discreet and indirect surveillance over the unmarried couple, they rarely found themselves alone with one another, so important was it to preserve the young woman’s virginity, whether or not she was of age. This concern would even grow with industrialization and the appearance of new places for young people to meet away from traditional family settings, since it became more difficult to exercise control over the young. On dates, the parents made sure that the couple was accompanied by a brother, a sister, other adults, or, if necessary, their friends. The revolution in traditions and norms took place in 1930 when domestic labour was in the context of the depression. This involved a sample of women who were already married at the beginning of that decade. The most catastrophic year according to the economic indicators, 1933, was used as a reference point. The reason was nothing other than the emergence of classes in the era, which were the resultant of lack of opportunities. The probability that women who married much after this date would have felt the effects of the Depression on their domestic labour was indeed less great. Nevertheless, in order to be able to establish comparisons, it was necessary to find women who had spent the early years of their marriages before the depression or whose husbands had been working during the first months of the marriage. The influence of the Depression and of unemployment was felt largely in urban areas and it was the men of the working class, especially unskilled labourers, and tradesmen who were primarily affected. These factors thus determined the selection of respondents who had to have lived in a working-class district of Montreal in the years between 1929 and 1939. The residence qualification, while it may seem rather vague, permitted us to enlist women who, because of their partners’ occupations, had shared the living conditions of the working class without necessarily presuming their own class affiliations. It was the factory workers who changed their occupation least often though the majority of them worked for more than one employer. They worked longer than the other women in the sample; it is among this group that is found the four women who worked for more than ten years before marriage. On the other hand, domestic work, generally detested because of its servile character and because of the extremely long hours which it entailed, is where we observe the greatest mobility, as only one informant worked exclusively as a domestic and she did so for a rather short period of time (one year). Domestics’ wages were extremely low, between one and five dollars a week, but according to one informant, â€Å"What our parents counted was the food. You understand, if you have two working, that’s two less to feed†. (Baillargeon Klein, 1999, p. 57) Most of the time, domestic work represented a transitional occupation between the home and the factory, or the office or shop. These jobs, factory worker, saleswoman or clerk, generally involved a noticeable increase in salary, but what was more appreciated were the working conditions, particularly regular hours and the possibility of contact with other working women. â€Å"It was clean, and we weren’t bored. It wasn’t like in the private homes, where the day was never over. The hell with private homes! We were happy enough-we had our evenings free†. (Baillargeon Klein, 1999, p. 96) In this connection, it must be stressed that it was not simply the household tasks or the conditions inherent in this kind of work that put them off, but also, and most particularly, the context in which they arose. Beyond the isolation, the arbitrary employers, the long hours, and the array of tasks demanded of them, what they detested above all else was the idea of being ‘in service to’ someone else, of playing the subordinate’s role in a highly personalized relationship. One major way that early modern women constructed selves, was through social networks, often women’s networks. These women fashioned their identities in relation to salons, convents, family circles, epistolary communities, and social religious groups devoted to particular reading or singing practices. For example, a trend towards devotional intimacy in France travelled through women’s letter writing, and psalm singing in churches established connections across gender and class barriers. (Adele Mikesell, 2003, p. 36) Conclusion Recent trends in women’s studies and feminist theory have influenced the conceptual framework and methodology of the facts explored about the early twentieth century women. While historians have traditionally explored continuities and discontinuities in ideas, institutions, and practices, postmodernism has given new dimension to the exploration of opposition or rupture not only in the facts, events, and ideas being studied, but also in the conceptual frameworks scholars analyse the changes that took place between 1900 and 1945. For some years, however, women’s history and the history of the family have underscored the importance of the domestic sphere and of the work which women do in it in order to understand the totality of historical reality. The work undertaken in these fields has provided evidence of the connections which exist between the family and the world of work and of the central role played in this dynamic by women. References/ Bibliography Adele Seeff Mikesell Margaret, (2003) Culture and Change: Attending to Early Modern Women: University of Delaware Press: Newark, DE. Baillargeon Denyse Klein YvonneMaking, (1999) Do: Women, Family, and Home in Montreal during the Great Depression: Wilfrid Laurier University Press: Waterloo, Ont. Caulfield Sueann, (2000) In Defense of Honor: Sexual Morality, Modernity, and Nation i

A Comparison Between Two Complementary Poems Essay Example for Free

A Comparison Between Two Complementary Poems Essay The two complementary poems Old Father and Island Man are based on the subject of two diverse men who are coping with an experience of migrating to another country. In this coursework we will discuss these poems, then compare, and contrast their theme and language. Hugh Boatswains Old Father appeared in an anthology called Writing in 1978. Boatswains work speaks to the condition of the racial tensions in the 70s and engages, in sparse poetic form, in much of the cultural analysis. Boatswains poems demonstrate the importance of creativity, cultural transaction, and transition in the historicizing of West Indian migration and settlement in Britain. The poet has used a narrative description in the poem to portray his views and thoughts to the members of the audience. The poem relates to a series of events of old father in a chronological order of his life. The poem depicts the livelihood and culture of a person from a distant atmosphere and surrounding who goes through a lot of hardships in the beginning due to the unknown environment. The poet has then given a brief sketch of his adaptation to the society and how he changes to accept those adaptations. The poem creates a depressing feeling in our hearts as the poet describes how old father forgets his culture and roots by his behaviour. The poet has described his views in rather an ambiguous way; no information obtained by us can be strongly evident. It tells the story of an old or older figure in the black community, how old is not known but can be presumed to the mid thirties or more. The title Old Father depicts a personage of high value, a person who would hold up and support the beliefs and values of the society. The title describes a man of experience, ingenuity, and responsibility. In the beginning of his shift to England the Caribbean man craved to return to his homeland. The poet then discusses how old father bought a turning point in his life and started changing his lifestyle to get more accepted in the society. This is indicated by the words Old Father feet begin to shift. His roots have no meaning now (Line No. 10 and 11). This is also an example of one of many metaphors in the poems, i.e. his feet are not actually shifting but his attitude is changing and he is accepting his situation in the society and is trying to improve it. In this process he is leaving nothing out, to the extent that he is ready to change his values, beliefs and ethical values to receive acceptance. He then discusses about old fathers personal and love life, he also brings up the point of how he changes his attitude towards his own friends of his race. Boatswain has added a variety of characters to the poem. Even though the vagueness of details of the character we can say that Old Father was undignified to an extent. From the following line Bouncing down the road with a blonde (Line No. 17) we can presume his indecency, as walking with a blonde is considered inappropriate due to the negative image they have created in the society. The whole image is cojourned by the term blonde relieving his change in attitude and lifestyle to be considered indecorous. The poet has chosen his words very particularly and has also considered the arrangement of these words. He has used a varied range of figures of speech like metonymy and personifications but has highly considered the use of metaphors. These figures of speech and choice of worlds create a rhythmatic design; this maintains the reader with an interested attitude. A lot of attention is given to the use of punctuations. Boatswains way of describing and explaining imagery is noteworthy. For example Cold bite him hard (Line No.2), this shows how painful the weather is to this Caribbean man in the beginning of his arrival. We can see how Boatswains use of language is very descriptive but concise and effective. The other poem Island Man is a piece of poetry written by Grace Nichols. She was born in Guyana and came to Britain in 1977. She writes this poem in context to a Caribbean man who has settled in London but still wakes up to the sound of the sea and the tranquillity of his native island. Island Man consists of a wide range of sounds and images to express the Caribbean mans feelings and thinking. For example the sound of the blue surf and the steady breaking and wombing (Line No.3 and 5) are good examples of his use of language and images for the description of his feelings. This poem is also told in a narrative manner but unlike Old Father the poem is more spontaneous. The poem is bought out in the form of a dream. A number of images are described to show how he imagined himself in his native island where there was no hindrance or disturbance but peace and tranquillity, whereas the atmosphere in London was completely contradictory to his dream. Therefore when he wakes up and enters the world of reality where he is back in London and hears the roar of the cars and screeches of the wheels instead of the sound of the sea he just says Another London day (Line No. 19). He probably says this as he has been living in London since a long time and is now frustrated with his usual rut and wants to get out of it and return to his paradise like island. His attitude towards this new environment is not so enthusiastic. This is indicated by the words groggily groggily (Line No. 11). He has already seen the usual busy days of London and has accepted them in his life and has acknowledged this new surrounding. But a sense of frustration has aroused and his crave for his native island just became greater than before. Both the poems hold a lot of similarity of cultures and attitudes towards the new migration. Both of them share unhappiness in this new environment of theirs. Both of them also discuss the bitter weather. But old father moves on in his life whereas in Island Man we will notice that there is not much of progression in the story. It is just a dream whereas the whole life of old father is discussed in the other poem. Hence a lot of contradictions are in the poem. Also the language and use of punctuations is very different. In Old Father punctuations are given a lot of importance and are very proper whereas in Island Man the poem consists of no punctuations at all. It forms more of a spontaneous attitude and also considers the lazy morning attitude of a person. Therefore as this is a dream the poet has very well described this quality and has also set a sense of spontaneous feelings and emotions. He is an example to his people (Line 41, Old Father), these were the words used to describe old father and his behaviour. It is the opinion of a white English racist person. This opinion can be adapted in two contradictory perceptions. The white people may say it in the context that every person from another country, another culture should act like him. They should also adopt the behaviour and culture of the country they live in. The contradictory statement to this would be that the white people are saying that he was a person who was ready to change for his benefit of himself and in the end of the day for h is own betterment he would forget his friends. Hence they jump to the conclusion that he is just an example of those people who are of his culture and each would do anything for their own personal benefits forgetting their personal beliefs and culture. In the end I would conclude saying that both the poems state a moral towards us. In Old Father we can say that a man should adapt towards his surrounding but that does not mean we should forget who we are, what is our identity. Whereas in Island Man we can see that a man has come to another country but still has not let go of the memories of his own countries and hence is not able to move on and adapt the good qualities of the country he is living with. Hence we should learn from this poem that thinking about our past and not moving on would just lead to frustration and everything would go wrong. Hence we should keep up the pace in life and never look back and ponder.

Impact of Credit Default Swaps (CDS)

Impact of Credit Default Swaps (CDS) Chapter 1 : Introduction A Swap is a derivative in which two counterparties agree to exchange one stream of cash flow against another stream. Swaps can be used to create unfunded exposures to an underlying asset, since counterparties can earn the profit or loss from movements in price without having to post the notional amount in cash or collateral. It can be used to hedge certain risks such as interest rate risk, or to speculate on changes in the expected direction of underlying prices. The main objective of the project is to understand about Credit Default Swaps (CDS), its global footprint, its role in subprime crisis, its settlement in global arena and to check the feasible settlement of CDS in India, after its introduction in India, by understanding about Indian Credit Derivatives market. Research is concerned with the systematic and objective collection, analysis and evaluation of information about specific aspects to check the feasible settlement of CDSs in India. The development of financial derivatives in recent past is astounding when we consider its volume globally. But at the same time the product once created for hedging the risk currently allows you to bear more risk sometimes making the whole financial system to tremble. May be thats why Warren Buffet called it a financial weapon of mass destruction. Whatever it may be but derivatives have grown exponentially and are necessary for the market to flourish. The credit derivatives are nothing but the logical extension to the family of derivatives and have already made its presence felt globally. The credit derivatives have played a significant role in the development of debt market but also share a blame for the proliferation of subprime crisis. A credit default swap which constitutes the major portion of credit derivatives is similar to an insurance contract which allows you to transfer your risk to third party in exchange of a premium. Right from its origin as plain vanilla product for hedging purpose it has grown to very complex products and now has posed a question mark on its credibility. The subprime crisis started in what were regarded as the worlds safest and most sophisticated markets and spread globally, carried by securities and derivatives that were thought to make the financial system safer. The subprime crisis brings the complexity of securitized products and derivatives products, the human greedy nature, inability of rating agencies to gauge the risk, inefficiency of regulatory bodies, etc. to the fore. Although CDS was not the cause of the subprime crisis but it had cascading effect on the market and was considered as the reason for the collapse of American International Group (AIG). The lessons from the consequences of subprime crisis have helped in creating awareness about the regulatory frameworks to be in place which has increased the transparency, standardization, and soundness in the market. The various measures include formation of central counterparty for CDS, hardwiring of auction protocol and ISDA determination committee. On the backdrop of global crisis the movement of CDS is being watched carefully. The various data sources now provide data even on weekly basis. The efforts are being paid off and the market size of CDS has reduced considerably. And now with the central counterparties in place the CDS market will have more transparency and better control. After opening up of the economy the equity market of India have grown significantly bringing in more transparency. But the corporate bond market is still in undeveloped mode and the efforts being taken on developing it have not provided expected returns. Under this light, India is now all set to launch Credit Default Swaps which are expected to ignite the spark which will flourish the corporate bond market. Considering the cautious nature of RBI and the havoc created by CDS in global market the move by RBI is significant. From the move of RBI one can say as the knife itself is not harmful but it depends whether its in doctors hand or a robbers hand. Similarly CDS as a product is certainly not harmful but its utility will depend on the judicious use of the same. Chapter 2: Literature Review Derivatives The global economic order that emerged after World War II was a system where many less developed countries administered prices and centrally allocated resources. Even the developed economies operated under the Bretton Woods system of fixed exchange rates. The system of fixed prices came under stress from the 1970s onwards. High inflation and unemployment rates made interest rates more volatile. The Bretton Woods system was dismantled in 1971, freeing exchange rates to fluctuate. Less developed countries like India began opening up their economies and allowing prices to vary with market conditions. Price fluctuations made it hard for businesses to estimate their future production costs and revenues. Derivative securities provide them with a valuable set of tools for managing this risk. Financial markets are, by nature, extremely volatile and hence, the risk factor is an Important concern for financial agents. To reduce this risk, the concept of derivatives comes into the picture. Derivatives are products whose values are derived from one or more basic variables called bases. These bases can be underlying assets (for example forex, equity, etc), bases or reference rates. It is afinancial instrument(or more simply, an agreement between two people/two parties) that has a value determined by the future price of something else. Derivatives can be thought of as bets on the price of something.Itis the collective name used for a broad class offinancial instrumentsthatderivetheir value from other financial instruments (known as the underlying), events or conditions. Essentially, a derivative is a contract between two parties where the value of the contract is linked to the price of another financial instrument or by a specified event or condition. Asecurity whose price is dependent upon or derived fromone or more underlying assets.The derivative itself is merely a contract between two or more parties. Itsvalue is determinedby fluctuationsin the underlying asset.The most common underlying assets includestocks, bonds,commodities,currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.Derivatives are generally used as an instrument to hedgerisk, but can also be used forspeculative purposes. 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. The transaction in this case would be the derivative, while the spot price of wheat would be the underlying asset. Derivatives have probably been around for as long as people have been trading with one another. Forward contracting dates back at least to the 12th century, and may well have been around before then. Merchants entered into contracts with one another for future delivery of specified amount of commodities at specified price. A primary motivation for pre-arranging a buyer or seller for a stock of commodities in early forward contracts was to lessen the possibility that large swings would inhibit marketing the commodity after a harvest. The need for a derivatives market The derivatives market performs a number of economic functions: They help in transferring risks from risk averse people to risk oriented people They help in the discovery of future as well as current prices They catalyze entrepreneurial activity They increase the volume traded in markets because of participation of risk averse people in greater numbers They increase savings and investment in the long run The participants in a derivatives market Hedgers use futures or options markets to reduce or eliminate the risk associated with price of an asset. Speculators use futures and options contracts to get extra leverage in betting on future movements in the price of an asset. They can increase both the potential gains and potential losses by usage of derivatives in a speculative venture. Arbitrageurs are in business to take advantage of a discrepancy between prices in two different markets. If, for example, they see the futures price of an asset getting out of line with the cash price, they will take offsetting positions in the two markets to lock in a profit. Types of Derivatives Forwards: A forward contract is a customized contract between two entities, where settlement takes place on a specific date in the future at todays pre-agreed price. Futures: 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. Futures contracts are special types of forward contracts in the sense that the former are standardized exchange-traded contracts Options: Options are of two types calls and puts. Calls give the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date. Puts give the buyer the right, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date. Warrants: Options generally have lives of upto one year, the majority of options traded on options exchanges having a maximum maturity of nine months. Longer-dated options are called warrants and are generally traded over-the-counter. LEAPS: The acronym LEAPS means Long-Term Equity Anticipation Securities. These are options having a maturity of upto three years. Baskets: Basket options are options on portfolios of underlying assets. The underlying asset is usually a moving average or a basket of assets. Equity index options are a form of basket options. Swaps: Swaps are private agreements between two parties to exchange cash flows in the future according to a prearranged formula. They can be regarded as portfolios of forward contracts. The two commonly used swaps are : Interest rate swaps: These entail swapping only the interest related cash flows between the parties in the same currency. Currency swaps: These entail swapping both principal and interest between the parties, with the cash flows in one direction being in a different currency than those in the opposite direction. Swaptions: Swaptions are options to buy or sell a swap that will become operative at the expiry of the options. Thus a swaption is an option on a forward swap. Rather than have calls and puts, the swaptions market has receiver swaptions and payer swaptions. A receiver swaption is an option to receive fixed and pay floating. A payer swaption is an options to pay fixed and receive floating. Uses of Derivatives Derivatives may be traded for a variety of reasons. A derivative enables a trader to hedge some pre-existing risk by taking positions in derivatives markets that offset potential losses in the underlying or spot market. In India, most derivatives users describe themselves as hedgers (Fitch Ratings, 2004) and Indian laws generally require that derivatives be used for hedging purposes only. Another motive for derivatives trading is speculation (i.e. taking positions to profit from anticipated price movements). In practice, it may be difficult to distinguish whether a particular trade was for hedging or speculation, and active markets require the participation of both hedgers and speculators. A third type of trader, called arbitrageurs, profit from discrepancies in the relationship of spot and derivatives prices, and thereby help to keep markets efficient. Jogani and Fernandes (2003) describe Indias long history in arbitrage trading, with line operators and traders arbitraging prices between exchanges located in different cities, and between two exchanges in the same city. Their study of Indian equity derivatives markets in 2002 indicates that markets were inefficient at that time. They argue that lack of knowledge; market frictions and regulatory impediments have led to low levels of capital employed in arbitrage trading in India. However, more recent evidence suggests that the efficiency of Indian equity derivatives markets may have improved (ISMR, 2004). Development of derivatives market in India Derivatives markets have been in existence in India in some form or other for a long time. In the area of commodities, the Bombay Cotton Trade Association started futures trading in 1875 and, by the early 1900s India had one of the worlds largest futures industry. In 1952 the government banned cash settlement and options trading and derivatives trading shifted to informal forwards markets. In recent years, government policy has changed, allowing for an increased role for market-based pricing and less suspicion of derivatives trading. The ban on futures trading of many commodities was lifted starting in the early 2000s, and national electronic commodity exchanges were created. In the equity markets, a system of trading called badla involving some elements of forwards trading had been in existence for decades.6 However, the system led to a number of undesirable practices and it was prohibited off and on till the Securities and Exchange Board of India (SEBI) banned it for good in 2001. A series of reforms of the stock market between 1993 and 1996 paved the way for the development of exchange-traded equity derivatives markets in India. In 1993, the government created the NSE in collaboration with state-owned financial institutions. NSE improved the efficiency and transparency of the stock markets by offering a fully automated screen-based trading system and real-time price dissemination. In 1995, a prohibition on trading options was lifted. In 1996, the NSE sent a proposal to SEBI for listing exchange-traded derivatives. The report of the L. C. Gupta Committee, set up by SEBI, recommended a phased introduction of derivative products, and bi-level regulation ( i.e., self-regulation by exchanges with SEBI providing a supervisory and advisory role). Another report, by the J. R. Varma Committee in 1998, worked out various operational details such as the margining systems. The first step towards introduction of derivatives trading in India was the promulgation of the Securities Laws(Amendment) Ordinance, 1995, which withdrew the prohibition on options in securities. The market for derivatives, however, did not take off, as there was no regulatory framework to govern trading of derivatives. SEBI set up a 24-member committee under the Chairmanship of Dr.L.C.Gupta on November 18, 1996 to develop appropriate regulatory framework for derivatives trading in India. The committee submitted its report on March 17, 1998 prescribing necessary pre-conditions for introduction of derivatives trading in India. The committee recommended that derivatives should be declared as securities so that regulatory framework applicable to trading of securities could also govern trading of securities. SEBI also set up a group in June 1998 under the Chairmanship of Prof.J.R.Varma, to recommend measures for risk control in derivatives market in India. The report, which was submitte d in October 1998, worked out the operational details of margining system, methodology for charging initial margins, broker net worth, deposit requirement and real-time monitoring requirements. The Securities Contract Regulation Act (SCRA) was amended in December 1999 to include derivatives within the ambit of securities and the regulatory framework was developed for governing derivatives trading. The act also made it clear that derivatives shall be legal and valid only if such contracts are traded on a recognized stock exchange, thus precluding OTC derivatives. The government also rescinded in March 2000, the three- decade old notification, which prohibited forward trading in securities. Derivatives trading commenced in India in June 2000 after SEBI granted the final approval to this effect in May 2001. SEBI permitted the derivative segments of two stock exchanges, NSE and BSE, and their clearing house/corporation to commence trading and settlement in approved derivatives contracts . To begin with, SEBI approved trading in index futures contracts based on SP CNX Nifty and BSE-30(Sensex) index. This was followed by approval for trading in options based on these two indexes and options on individual securities. The trading in BSE Sensex options commenced on June 4, 2001 and the trading in options on individual securities commenced in July 2001. Futures contracts on individual stocks were launched in November 2001. The derivatives trading on NSE commenced with SP CNX Nifty Index futures on June 12, 2000. The trading in index options commenced on June 4, 2001 and trading in options on individual securities commenced on July 2, 2001. Single stock futures were launched on November 9, 2001. The index futures and options contract on NSE are based on SP CNX Trading and settlement in derivative contracts is done in accordance with the rules, byelaws, and regulations of the respective exchanges and their clearing house/corporation duly approved by SEBI and notified in the official gazette. Foreign Institutional Investors (FIIs) are permitted to trade in all Exchange traded derivative products. The following are some observations based on the trading statistics provided in the NSE report on the futur es and options (FO): †¢ Single-stock futures continue to account for a sizable proportion of the FO segment. It constituted 70 per cent of the total turnover during June 2002. A primary reason attributed to this phenomenon is that traders are comfortable with single-stock futures than equity options, as the former closely resembles the erstwhile badla system. On relative terms, volumes in the index options segment continues to remain poor. This may be due to the low volatility of the spot index. Typically, options are considered more valuable when the volatility of the underlying (in this case, the index) is high. A related issue is that brokers do not earn high commissions by recommending index options to their clients, because low volatility leads to higher waiting time for round-trips. Put volumes in the index options and equity options segment have increased since January 2002. The call-put volumes in index options have decreased from 2.86 in January 2002 to 1.32 in June. The fall in call-put volumes ratio suggests that the traders are increasingly becoming pessimistic on the market. Farther month futures contracts are still not actively traded. Trading in equity options on most stocks for even the next month was non-existent. Daily option price variations suggest that traders use the FO segment as a less risky alternative (read substitute) to generate profits from the stock price movements. The fact that the option premiums tail intra-day stock prices is evidence to this. Calls on Satyam fall, while puts rise when Satyam falls intra-day. If calls and puts are not looked as just substitutes for spot trading, the intra-day stock price variations should not have a one-to-one impact on the option premiums. SWAP In finance, a SWAP is a derivative in which two counterparties agree to exchange one stream of cash flow against another stream. These streams are called the legs of the swap. Conventionally they are the exchange of one security for another to change the maturity (bonds), quality of issues (stocks or bonds), or because investment objectives have changed. A swap is an agreement to exchange one stream of cash flows for another. Swaps are most usually used to:- Switch financing in one country for financing in another To replace a floating interest rate swap with a fixed interest rate (or vice versa) (Litzenberger, R.H)In August 1981 the World Bank issued $290 million in euro-bonds and swapped the interest and principal on these bonds with IBM for Swiss francs and German marks. The rapid growth in the use of interest rate swaps, currency swaps, and swaptions (options on swaps) has been phenomenal. Currently, the amount of outstanding interest rate and currency swaps is almost $3 trillion. Recently, swaps have grown to include currency swaps and interest rate swaps. It can be used to hedge certain risks such as interest rate risk, or to speculate on changes in the expected direction of underlying prices. If firms in separate countries have comparative advantages on interest rates, then a swap could benefit both firms. For example, one firm may have a lower fixed interest rate, while another has access to a lower floating interest rate. These firms could swap to take advantage of the lower rates. Different types of swaps:- Currency Swaps Cross currency swaps are agreements between counterparties to exchange interest and principal payments in different currencies. Like a forward, a cross currency swap consists of the exchange of principal amounts (based on todays spot rate) and interest payments between counterparties. It is considered to be a foreign exchange transaction and is not required by law to be shown on the balance sheet. In a currency swap, these streams of cash flows consist of a stream of interest and principal payments in one currency exchanged for a stream, of interest and principal payments of the same maturity in another currency. Because of the exchange and re-exchange of notional principal amounts, the currency swap generates a larger credit exposure than the interest rate swap. Cross-currency swaps can be used to transform the currency denomination of assets and liabilities. They are effective tools for managing foreign currency risk. They can create currency match within its portfolio and minimize exposures. Firms can use them to hedge foreign currency debts and foreign net investments. Currency swaps give companies extra flexibility to exploit their comparative advantage in their respective borrowing markets. Currency swaps allow companies to exploit advantages across a matrix of currencies and maturities. Currency swaps were originally done to get around exchange controls and hedge the risk on currency rate movements. It also helps in Reducing costs and risks associated with currency exchange. They are often combined with interest rate swaps. For example, one company would seek to swap a cash flow for their fixed rate debt denominated in US dollars for a floating-rate debt denominated in Euro. This is especially common in Europe where companies shop for the cheapest debt regardless of its denomination and then seek to exchange it for the debt in desired currency. Credit Default Swap Credit Default Swap is a financial instrument for swapping the risk of debt default. Credit default swaps may be used for emerging market bonds, mortgage backed securities, corporate bonds and local government bond. The buyer of a credit default swap pays a premium for effectively insuring against a debt default. He receives a lump sum payment if the debt instrument is defaulted. The seller of a credit default swap receives monthly payments from the buyer. If the debt instrument defaults they have to pay the agreed amount to the buyer of the credit default swap. The first credit default swap was introduced in 1995 by JP Morgan. By 2007, their total value has increased to an estimated $45 trillion to $62 trillion. Although since only 0.2% of Investment Companys default, the cash flow is much lower than this actual amount. Therefore, this shows that credit default swaps are being used for speculation and not insuring against actual bonds. As Warren Buffett calls them financial weapons of mass destruction. The credit default swaps are being blamed for much of the current market meltdown. Example of Credit Default Swap An investment trust owns  £1 million corporation bond issued by a private housing firm. If there is a risk the private housing firm may default on repayments, the investment trust may buy a CDS from a hedge fund. The CDS is worth  £1 million. The investment trust will pay an interest on this credit default swap of say 3%. This could involve payments of  £30,000 a year for the duration of the contract. If the private housing firm doesnt default. The hedge fund gains the interest from the investment bank and pays nothing out. It is simple profit. If the private housing firm does default, then the hedge fund has to pay compensation to the investment bank of  £1 million the value of the credit default swap. Therefore the hedge fund takes on a larger risk and could end up paying  £1million The higher the perceived risk of the bond, the higher the interest rate the hedge fund will require. Credit default swaps are used not only by investment banks, but also by other financial institutions. Corporate entities use credit default swaps either for protection purposes, to hedge or to sell. Investment banks are primarily affected by the buyers. If a number of major corporate entities have bought protection from the same investment bank, and all of them fail simultaneously, this will put pressure on the investment bank to pay out. Moreover, the credit risk caused by the above failure may lead to other risks, such as liquidity risk, market risk and operational risk. Therefore, most of the investment banks re-sell the sold protection on the market to other market participants. Edwards (2004) argues that derivatives do not reduce credit risk, but rather transfer it from banks to other banks or entities. Therefore, most of the investment banks re-sell the sold protection on the market to other market participants. Edwards (2004) argues that derivatives do not reduce credit risk, but rather transfer it from banks to other banks or entities. Some of the top banks in America are carrying unknown gambling risks that no one has warned about, and they are all tied up in U.S. bank derivative portfolios (Edwards M, 2004). Commodity Swap A commodity swap is an agreement whereby a floating (or market or spot) price is exchanged for a fixed price over a specified period. The vast majority of commodity swaps involve oil. A swap where exchanged cash flows are dependent on the price of an underlying commodity. This swap is usually used to hedge against the price of a commodity. Commodities are physical assets such as precious metals, base metals, energy stores (such as natural gas or crude oil) and food (including wheat, pork bellies, cattle, etc.). In this swap, the user of a commodity would secure a maximum price and agree to pay a financial institution this fixed price. Then in return, the user would get payments based on the market price for the commodity involved. They are used for hedging against Fluctuations in commodity prices or Fluctuations in spreads between final product and raw material prices. A company that uses commodities as input may find its profits becoming very volatile if the commodity prices become volatile. This is particularly so when the output prices may not change as frequently as the commodity prices change. In such cases, the company would enter into a swap whereby it receives payment linked to commodity prices and pays a fixed rate in exchange. There are two kinds of agents participating in the commodity markets: end-users (hedgers) and investors (speculators). Commodity swaps are becoming increasingly common in the energy and agricultural industries, where demand and supply are both subject to considerable uncertainty. For example, heavy users of oil, such as airlines, will often enter into contracts in which they agree to make a series of fixed payments, say every six months for two years, and receive payments on those same dates as determined by an oil price index. Computations are often based on a specific number of tons of oil in order to lock in the price the airline pays for a specific quantity of oil, purchased at regular intervals over the two-year period. However, the airline will typically buy the actual oil it needs from the spot market. Equity Swap The outstanding performance of equity markets in the 1980s and the 1990s, have brought in some technological innovations that have made widespread participation in the equity market more feasible and more marketable and the demographic imperative of baby-boomer saving has generated significant interest in equity derivatives. In addition to the listed equity options on individual stocks and individual indices, a burgeoning over-the-counter (OTC) market has evolved in the distribution and utilization of equity swaps. An equity swap is a special type of total return swap, where the underlying asset is a stock, a basket of stocks, or a stock index. An exchange of the potential appreciation of equitys value and dividends for a guaranteed return plus any decrease in the value of the equity. An equity swap permits an equity holder a guaranteed return but demands the holder give up all rights to appreciation and dividend income. Compared to actually owning the stock, in this case you do not have to pay anything up front, but you do not have any voting or other rights that stock holders do have. Equity swaps make the index trading strategy even easier. Besides diversification and tax benefits, equity swaps also allow large institutions to hedge specific assets or positions in their portfolios The equity swap is the best swap amongst all the other swaps as it being an over-the-counter derivatives transaction; they have the attractive feature of being customizable for a particular users situation. Investors may have specific time horizons, portfolio compositions, or other terms and conditions that are not matched by exchange-listed derivatives. They are private transactions that are not directly reportable to any regulatory authority. A derivatives dealer can, through a foreign subsidiary in the particular country, invest in the foreign securities without the withholding tax and enter into a swap with the parent dealer company, which can then enter a swap with the American investor, effectively passing on the dividends without the withholding tax Interest Rate Swap An interest rate swap, or simply a rate swap, is an agreement between two parties to exchange a sequence of interest payments without exchanging the underlying debt. In a typical fixed/floating rate swap, the first party promises to pay to the second at designated intervals a stipulated amount of interest calculated at a fixed rate on the notional principal; the second party promises to pay to the first at the same intervals a floating amount of interest on the notional principle calculated according to a floating-rate index. The interest rate swap is essentially a strip of forward contracts exchanging interest payments. Thus, interest rate swaps, like interest rate futures or interest rate forward contracts, offer a mechanism for restructuring cash flows and, if properly used, provide a financial instrument for hedging against interest rate risk The reason for the exchange of the interest obligation is to take benefit from comparative advantage. Some companies may have comparative advantage in fixed rate markets while other companies have a comparative advantage in floating rate markets. When companies want to borrow they look for cheap borrowing i.e. from the market where they have comparative advantage. However this may lead to a company borrowing fixed when it wants floating or borrowing floating when it wants fixed. This is where a swap comes in. A swap has the effect of transforming a fixed rate loan into a float Impact of Credit Default Swaps (CDS) Impact of Credit Default Swaps (CDS) Chapter 1 : Introduction A Swap is a derivative in which two counterparties agree to exchange one stream of cash flow against another stream. Swaps can be used to create unfunded exposures to an underlying asset, since counterparties can earn the profit or loss from movements in price without having to post the notional amount in cash or collateral. It can be used to hedge certain risks such as interest rate risk, or to speculate on changes in the expected direction of underlying prices. The main objective of the project is to understand about Credit Default Swaps (CDS), its global footprint, its role in subprime crisis, its settlement in global arena and to check the feasible settlement of CDS in India, after its introduction in India, by understanding about Indian Credit Derivatives market. Research is concerned with the systematic and objective collection, analysis and evaluation of information about specific aspects to check the feasible settlement of CDSs in India. The development of financial derivatives in recent past is astounding when we consider its volume globally. But at the same time the product once created for hedging the risk currently allows you to bear more risk sometimes making the whole financial system to tremble. May be thats why Warren Buffet called it a financial weapon of mass destruction. Whatever it may be but derivatives have grown exponentially and are necessary for the market to flourish. The credit derivatives are nothing but the logical extension to the family of derivatives and have already made its presence felt globally. The credit derivatives have played a significant role in the development of debt market but also share a blame for the proliferation of subprime crisis. A credit default swap which constitutes the major portion of credit derivatives is similar to an insurance contract which allows you to transfer your risk to third party in exchange of a premium. Right from its origin as plain vanilla product for hedging purpose it has grown to very complex products and now has posed a question mark on its credibility. The subprime crisis started in what were regarded as the worlds safest and most sophisticated markets and spread globally, carried by securities and derivatives that were thought to make the financial system safer. The subprime crisis brings the complexity of securitized products and derivatives products, the human greedy nature, inability of rating agencies to gauge the risk, inefficiency of regulatory bodies, etc. to the fore. Although CDS was not the cause of the subprime crisis but it had cascading effect on the market and was considered as the reason for the collapse of American International Group (AIG). The lessons from the consequences of subprime crisis have helped in creating awareness about the regulatory frameworks to be in place which has increased the transparency, standardization, and soundness in the market. The various measures include formation of central counterparty for CDS, hardwiring of auction protocol and ISDA determination committee. On the backdrop of global crisis the movement of CDS is being watched carefully. The various data sources now provide data even on weekly basis. The efforts are being paid off and the market size of CDS has reduced considerably. And now with the central counterparties in place the CDS market will have more transparency and better control. After opening up of the economy the equity market of India have grown significantly bringing in more transparency. But the corporate bond market is still in undeveloped mode and the efforts being taken on developing it have not provided expected returns. Under this light, India is now all set to launch Credit Default Swaps which are expected to ignite the spark which will flourish the corporate bond market. Considering the cautious nature of RBI and the havoc created by CDS in global market the move by RBI is significant. From the move of RBI one can say as the knife itself is not harmful but it depends whether its in doctors hand or a robbers hand. Similarly CDS as a product is certainly not harmful but its utility will depend on the judicious use of the same. Chapter 2: Literature Review Derivatives The global economic order that emerged after World War II was a system where many less developed countries administered prices and centrally allocated resources. Even the developed economies operated under the Bretton Woods system of fixed exchange rates. The system of fixed prices came under stress from the 1970s onwards. High inflation and unemployment rates made interest rates more volatile. The Bretton Woods system was dismantled in 1971, freeing exchange rates to fluctuate. Less developed countries like India began opening up their economies and allowing prices to vary with market conditions. Price fluctuations made it hard for businesses to estimate their future production costs and revenues. Derivative securities provide them with a valuable set of tools for managing this risk. Financial markets are, by nature, extremely volatile and hence, the risk factor is an Important concern for financial agents. To reduce this risk, the concept of derivatives comes into the picture. Derivatives are products whose values are derived from one or more basic variables called bases. These bases can be underlying assets (for example forex, equity, etc), bases or reference rates. It is afinancial instrument(or more simply, an agreement between two people/two parties) that has a value determined by the future price of something else. Derivatives can be thought of as bets on the price of something.Itis the collective name used for a broad class offinancial instrumentsthatderivetheir value from other financial instruments (known as the underlying), events or conditions. Essentially, a derivative is a contract between two parties where the value of the contract is linked to the price of another financial instrument or by a specified event or condition. Asecurity whose price is dependent upon or derived fromone or more underlying assets.The derivative itself is merely a contract between two or more parties. Itsvalue is determinedby fluctuationsin the underlying asset.The most common underlying assets includestocks, bonds,commodities,currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.Derivatives are generally used as an instrument to hedgerisk, but can also be used forspeculative purposes. 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. The transaction in this case would be the derivative, while the spot price of wheat would be the underlying asset. Derivatives have probably been around for as long as people have been trading with one another. Forward contracting dates back at least to the 12th century, and may well have been around before then. Merchants entered into contracts with one another for future delivery of specified amount of commodities at specified price. A primary motivation for pre-arranging a buyer or seller for a stock of commodities in early forward contracts was to lessen the possibility that large swings would inhibit marketing the commodity after a harvest. The need for a derivatives market The derivatives market performs a number of economic functions: They help in transferring risks from risk averse people to risk oriented people They help in the discovery of future as well as current prices They catalyze entrepreneurial activity They increase the volume traded in markets because of participation of risk averse people in greater numbers They increase savings and investment in the long run The participants in a derivatives market Hedgers use futures or options markets to reduce or eliminate the risk associated with price of an asset. Speculators use futures and options contracts to get extra leverage in betting on future movements in the price of an asset. They can increase both the potential gains and potential losses by usage of derivatives in a speculative venture. Arbitrageurs are in business to take advantage of a discrepancy between prices in two different markets. If, for example, they see the futures price of an asset getting out of line with the cash price, they will take offsetting positions in the two markets to lock in a profit. Types of Derivatives Forwards: A forward contract is a customized contract between two entities, where settlement takes place on a specific date in the future at todays pre-agreed price. Futures: 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. Futures contracts are special types of forward contracts in the sense that the former are standardized exchange-traded contracts Options: Options are of two types calls and puts. Calls give the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date. Puts give the buyer the right, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date. Warrants: Options generally have lives of upto one year, the majority of options traded on options exchanges having a maximum maturity of nine months. Longer-dated options are called warrants and are generally traded over-the-counter. LEAPS: The acronym LEAPS means Long-Term Equity Anticipation Securities. These are options having a maturity of upto three years. Baskets: Basket options are options on portfolios of underlying assets. The underlying asset is usually a moving average or a basket of assets. Equity index options are a form of basket options. Swaps: Swaps are private agreements between two parties to exchange cash flows in the future according to a prearranged formula. They can be regarded as portfolios of forward contracts. The two commonly used swaps are : Interest rate swaps: These entail swapping only the interest related cash flows between the parties in the same currency. Currency swaps: These entail swapping both principal and interest between the parties, with the cash flows in one direction being in a different currency than those in the opposite direction. Swaptions: Swaptions are options to buy or sell a swap that will become operative at the expiry of the options. Thus a swaption is an option on a forward swap. Rather than have calls and puts, the swaptions market has receiver swaptions and payer swaptions. A receiver swaption is an option to receive fixed and pay floating. A payer swaption is an options to pay fixed and receive floating. Uses of Derivatives Derivatives may be traded for a variety of reasons. A derivative enables a trader to hedge some pre-existing risk by taking positions in derivatives markets that offset potential losses in the underlying or spot market. In India, most derivatives users describe themselves as hedgers (Fitch Ratings, 2004) and Indian laws generally require that derivatives be used for hedging purposes only. Another motive for derivatives trading is speculation (i.e. taking positions to profit from anticipated price movements). In practice, it may be difficult to distinguish whether a particular trade was for hedging or speculation, and active markets require the participation of both hedgers and speculators. A third type of trader, called arbitrageurs, profit from discrepancies in the relationship of spot and derivatives prices, and thereby help to keep markets efficient. Jogani and Fernandes (2003) describe Indias long history in arbitrage trading, with line operators and traders arbitraging prices between exchanges located in different cities, and between two exchanges in the same city. Their study of Indian equity derivatives markets in 2002 indicates that markets were inefficient at that time. They argue that lack of knowledge; market frictions and regulatory impediments have led to low levels of capital employed in arbitrage trading in India. However, more recent evidence suggests that the efficiency of Indian equity derivatives markets may have improved (ISMR, 2004). Development of derivatives market in India Derivatives markets have been in existence in India in some form or other for a long time. In the area of commodities, the Bombay Cotton Trade Association started futures trading in 1875 and, by the early 1900s India had one of the worlds largest futures industry. In 1952 the government banned cash settlement and options trading and derivatives trading shifted to informal forwards markets. In recent years, government policy has changed, allowing for an increased role for market-based pricing and less suspicion of derivatives trading. The ban on futures trading of many commodities was lifted starting in the early 2000s, and national electronic commodity exchanges were created. In the equity markets, a system of trading called badla involving some elements of forwards trading had been in existence for decades.6 However, the system led to a number of undesirable practices and it was prohibited off and on till the Securities and Exchange Board of India (SEBI) banned it for good in 2001. A series of reforms of the stock market between 1993 and 1996 paved the way for the development of exchange-traded equity derivatives markets in India. In 1993, the government created the NSE in collaboration with state-owned financial institutions. NSE improved the efficiency and transparency of the stock markets by offering a fully automated screen-based trading system and real-time price dissemination. In 1995, a prohibition on trading options was lifted. In 1996, the NSE sent a proposal to SEBI for listing exchange-traded derivatives. The report of the L. C. Gupta Committee, set up by SEBI, recommended a phased introduction of derivative products, and bi-level regulation ( i.e., self-regulation by exchanges with SEBI providing a supervisory and advisory role). Another report, by the J. R. Varma Committee in 1998, worked out various operational details such as the margining systems. The first step towards introduction of derivatives trading in India was the promulgation of the Securities Laws(Amendment) Ordinance, 1995, which withdrew the prohibition on options in securities. The market for derivatives, however, did not take off, as there was no regulatory framework to govern trading of derivatives. SEBI set up a 24-member committee under the Chairmanship of Dr.L.C.Gupta on November 18, 1996 to develop appropriate regulatory framework for derivatives trading in India. The committee submitted its report on March 17, 1998 prescribing necessary pre-conditions for introduction of derivatives trading in India. The committee recommended that derivatives should be declared as securities so that regulatory framework applicable to trading of securities could also govern trading of securities. SEBI also set up a group in June 1998 under the Chairmanship of Prof.J.R.Varma, to recommend measures for risk control in derivatives market in India. The report, which was submitte d in October 1998, worked out the operational details of margining system, methodology for charging initial margins, broker net worth, deposit requirement and real-time monitoring requirements. The Securities Contract Regulation Act (SCRA) was amended in December 1999 to include derivatives within the ambit of securities and the regulatory framework was developed for governing derivatives trading. The act also made it clear that derivatives shall be legal and valid only if such contracts are traded on a recognized stock exchange, thus precluding OTC derivatives. The government also rescinded in March 2000, the three- decade old notification, which prohibited forward trading in securities. Derivatives trading commenced in India in June 2000 after SEBI granted the final approval to this effect in May 2001. SEBI permitted the derivative segments of two stock exchanges, NSE and BSE, and their clearing house/corporation to commence trading and settlement in approved derivatives contracts . To begin with, SEBI approved trading in index futures contracts based on SP CNX Nifty and BSE-30(Sensex) index. This was followed by approval for trading in options based on these two indexes and options on individual securities. The trading in BSE Sensex options commenced on June 4, 2001 and the trading in options on individual securities commenced in July 2001. Futures contracts on individual stocks were launched in November 2001. The derivatives trading on NSE commenced with SP CNX Nifty Index futures on June 12, 2000. The trading in index options commenced on June 4, 2001 and trading in options on individual securities commenced on July 2, 2001. Single stock futures were launched on November 9, 2001. The index futures and options contract on NSE are based on SP CNX Trading and settlement in derivative contracts is done in accordance with the rules, byelaws, and regulations of the respective exchanges and their clearing house/corporation duly approved by SEBI and notified in the official gazette. Foreign Institutional Investors (FIIs) are permitted to trade in all Exchange traded derivative products. The following are some observations based on the trading statistics provided in the NSE report on the futur es and options (FO): †¢ Single-stock futures continue to account for a sizable proportion of the FO segment. It constituted 70 per cent of the total turnover during June 2002. A primary reason attributed to this phenomenon is that traders are comfortable with single-stock futures than equity options, as the former closely resembles the erstwhile badla system. On relative terms, volumes in the index options segment continues to remain poor. This may be due to the low volatility of the spot index. Typically, options are considered more valuable when the volatility of the underlying (in this case, the index) is high. A related issue is that brokers do not earn high commissions by recommending index options to their clients, because low volatility leads to higher waiting time for round-trips. Put volumes in the index options and equity options segment have increased since January 2002. The call-put volumes in index options have decreased from 2.86 in January 2002 to 1.32 in June. The fall in call-put volumes ratio suggests that the traders are increasingly becoming pessimistic on the market. Farther month futures contracts are still not actively traded. Trading in equity options on most stocks for even the next month was non-existent. Daily option price variations suggest that traders use the FO segment as a less risky alternative (read substitute) to generate profits from the stock price movements. The fact that the option premiums tail intra-day stock prices is evidence to this. Calls on Satyam fall, while puts rise when Satyam falls intra-day. If calls and puts are not looked as just substitutes for spot trading, the intra-day stock price variations should not have a one-to-one impact on the option premiums. SWAP In finance, a SWAP is a derivative in which two counterparties agree to exchange one stream of cash flow against another stream. These streams are called the legs of the swap. Conventionally they are the exchange of one security for another to change the maturity (bonds), quality of issues (stocks or bonds), or because investment objectives have changed. A swap is an agreement to exchange one stream of cash flows for another. Swaps are most usually used to:- Switch financing in one country for financing in another To replace a floating interest rate swap with a fixed interest rate (or vice versa) (Litzenberger, R.H)In August 1981 the World Bank issued $290 million in euro-bonds and swapped the interest and principal on these bonds with IBM for Swiss francs and German marks. The rapid growth in the use of interest rate swaps, currency swaps, and swaptions (options on swaps) has been phenomenal. Currently, the amount of outstanding interest rate and currency swaps is almost $3 trillion. Recently, swaps have grown to include currency swaps and interest rate swaps. It can be used to hedge certain risks such as interest rate risk, or to speculate on changes in the expected direction of underlying prices. If firms in separate countries have comparative advantages on interest rates, then a swap could benefit both firms. For example, one firm may have a lower fixed interest rate, while another has access to a lower floating interest rate. These firms could swap to take advantage of the lower rates. Different types of swaps:- Currency Swaps Cross currency swaps are agreements between counterparties to exchange interest and principal payments in different currencies. Like a forward, a cross currency swap consists of the exchange of principal amounts (based on todays spot rate) and interest payments between counterparties. It is considered to be a foreign exchange transaction and is not required by law to be shown on the balance sheet. In a currency swap, these streams of cash flows consist of a stream of interest and principal payments in one currency exchanged for a stream, of interest and principal payments of the same maturity in another currency. Because of the exchange and re-exchange of notional principal amounts, the currency swap generates a larger credit exposure than the interest rate swap. Cross-currency swaps can be used to transform the currency denomination of assets and liabilities. They are effective tools for managing foreign currency risk. They can create currency match within its portfolio and minimize exposures. Firms can use them to hedge foreign currency debts and foreign net investments. Currency swaps give companies extra flexibility to exploit their comparative advantage in their respective borrowing markets. Currency swaps allow companies to exploit advantages across a matrix of currencies and maturities. Currency swaps were originally done to get around exchange controls and hedge the risk on currency rate movements. It also helps in Reducing costs and risks associated with currency exchange. They are often combined with interest rate swaps. For example, one company would seek to swap a cash flow for their fixed rate debt denominated in US dollars for a floating-rate debt denominated in Euro. This is especially common in Europe where companies shop for the cheapest debt regardless of its denomination and then seek to exchange it for the debt in desired currency. Credit Default Swap Credit Default Swap is a financial instrument for swapping the risk of debt default. Credit default swaps may be used for emerging market bonds, mortgage backed securities, corporate bonds and local government bond. The buyer of a credit default swap pays a premium for effectively insuring against a debt default. He receives a lump sum payment if the debt instrument is defaulted. The seller of a credit default swap receives monthly payments from the buyer. If the debt instrument defaults they have to pay the agreed amount to the buyer of the credit default swap. The first credit default swap was introduced in 1995 by JP Morgan. By 2007, their total value has increased to an estimated $45 trillion to $62 trillion. Although since only 0.2% of Investment Companys default, the cash flow is much lower than this actual amount. Therefore, this shows that credit default swaps are being used for speculation and not insuring against actual bonds. As Warren Buffett calls them financial weapons of mass destruction. The credit default swaps are being blamed for much of the current market meltdown. Example of Credit Default Swap An investment trust owns  £1 million corporation bond issued by a private housing firm. If there is a risk the private housing firm may default on repayments, the investment trust may buy a CDS from a hedge fund. The CDS is worth  £1 million. The investment trust will pay an interest on this credit default swap of say 3%. This could involve payments of  £30,000 a year for the duration of the contract. If the private housing firm doesnt default. The hedge fund gains the interest from the investment bank and pays nothing out. It is simple profit. If the private housing firm does default, then the hedge fund has to pay compensation to the investment bank of  £1 million the value of the credit default swap. Therefore the hedge fund takes on a larger risk and could end up paying  £1million The higher the perceived risk of the bond, the higher the interest rate the hedge fund will require. Credit default swaps are used not only by investment banks, but also by other financial institutions. Corporate entities use credit default swaps either for protection purposes, to hedge or to sell. Investment banks are primarily affected by the buyers. If a number of major corporate entities have bought protection from the same investment bank, and all of them fail simultaneously, this will put pressure on the investment bank to pay out. Moreover, the credit risk caused by the above failure may lead to other risks, such as liquidity risk, market risk and operational risk. Therefore, most of the investment banks re-sell the sold protection on the market to other market participants. Edwards (2004) argues that derivatives do not reduce credit risk, but rather transfer it from banks to other banks or entities. Therefore, most of the investment banks re-sell the sold protection on the market to other market participants. Edwards (2004) argues that derivatives do not reduce credit risk, but rather transfer it from banks to other banks or entities. Some of the top banks in America are carrying unknown gambling risks that no one has warned about, and they are all tied up in U.S. bank derivative portfolios (Edwards M, 2004). Commodity Swap A commodity swap is an agreement whereby a floating (or market or spot) price is exchanged for a fixed price over a specified period. The vast majority of commodity swaps involve oil. A swap where exchanged cash flows are dependent on the price of an underlying commodity. This swap is usually used to hedge against the price of a commodity. Commodities are physical assets such as precious metals, base metals, energy stores (such as natural gas or crude oil) and food (including wheat, pork bellies, cattle, etc.). In this swap, the user of a commodity would secure a maximum price and agree to pay a financial institution this fixed price. Then in return, the user would get payments based on the market price for the commodity involved. They are used for hedging against Fluctuations in commodity prices or Fluctuations in spreads between final product and raw material prices. A company that uses commodities as input may find its profits becoming very volatile if the commodity prices become volatile. This is particularly so when the output prices may not change as frequently as the commodity prices change. In such cases, the company would enter into a swap whereby it receives payment linked to commodity prices and pays a fixed rate in exchange. There are two kinds of agents participating in the commodity markets: end-users (hedgers) and investors (speculators). Commodity swaps are becoming increasingly common in the energy and agricultural industries, where demand and supply are both subject to considerable uncertainty. For example, heavy users of oil, such as airlines, will often enter into contracts in which they agree to make a series of fixed payments, say every six months for two years, and receive payments on those same dates as determined by an oil price index. Computations are often based on a specific number of tons of oil in order to lock in the price the airline pays for a specific quantity of oil, purchased at regular intervals over the two-year period. However, the airline will typically buy the actual oil it needs from the spot market. Equity Swap The outstanding performance of equity markets in the 1980s and the 1990s, have brought in some technological innovations that have made widespread participation in the equity market more feasible and more marketable and the demographic imperative of baby-boomer saving has generated significant interest in equity derivatives. In addition to the listed equity options on individual stocks and individual indices, a burgeoning over-the-counter (OTC) market has evolved in the distribution and utilization of equity swaps. An equity swap is a special type of total return swap, where the underlying asset is a stock, a basket of stocks, or a stock index. An exchange of the potential appreciation of equitys value and dividends for a guaranteed return plus any decrease in the value of the equity. An equity swap permits an equity holder a guaranteed return but demands the holder give up all rights to appreciation and dividend income. Compared to actually owning the stock, in this case you do not have to pay anything up front, but you do not have any voting or other rights that stock holders do have. Equity swaps make the index trading strategy even easier. Besides diversification and tax benefits, equity swaps also allow large institutions to hedge specific assets or positions in their portfolios The equity swap is the best swap amongst all the other swaps as it being an over-the-counter derivatives transaction; they have the attractive feature of being customizable for a particular users situation. Investors may have specific time horizons, portfolio compositions, or other terms and conditions that are not matched by exchange-listed derivatives. They are private transactions that are not directly reportable to any regulatory authority. A derivatives dealer can, through a foreign subsidiary in the particular country, invest in the foreign securities without the withholding tax and enter into a swap with the parent dealer company, which can then enter a swap with the American investor, effectively passing on the dividends without the withholding tax Interest Rate Swap An interest rate swap, or simply a rate swap, is an agreement between two parties to exchange a sequence of interest payments without exchanging the underlying debt. In a typical fixed/floating rate swap, the first party promises to pay to the second at designated intervals a stipulated amount of interest calculated at a fixed rate on the notional principal; the second party promises to pay to the first at the same intervals a floating amount of interest on the notional principle calculated according to a floating-rate index. The interest rate swap is essentially a strip of forward contracts exchanging interest payments. Thus, interest rate swaps, like interest rate futures or interest rate forward contracts, offer a mechanism for restructuring cash flows and, if properly used, provide a financial instrument for hedging against interest rate risk The reason for the exchange of the interest obligation is to take benefit from comparative advantage. Some companies may have comparative advantage in fixed rate markets while other companies have a comparative advantage in floating rate markets. When companies want to borrow they look for cheap borrowing i.e. from the market where they have comparative advantage. However this may lead to a company borrowing fixed when it wants floating or borrowing floating when it wants fixed. This is where a swap comes in. A swap has the effect of transforming a fixed rate loan into a float

My Agony is More Noble Than Your Pain :: Essays Papers

My Agony is More Noble Than Your Pain In a world where an infallibly righteous God oversees justice, the source of all human suffering is known and understood. While this may not make the pain of the punishment He assigns any less agonizing, it at least lends it clarity. When Job loses his family and his fortune, he immediately knows with whom to take up his case. However, in a world where the gods do not determine all human actions and exert their influence arbitrarily, one’s misfortune is wholly one’s own to bear, no matter how undeserved it may be. Sophocles emphasizes this human aspect of injustice in Electra and Philoctetes, placing both main characters in a position of undeserved suffering caused largely by human actions. Electra and Philoctetes are in a situation comparable to Job—they were wronged by powers mightier than themselves and bringing those powers to justice is an arduous or downright impossible task. Both characters must decide whether to cling to their suffering because it is just , at the expense of their humanity or their lives, or to relinquish it in order to rejoin society either literally, in Philoctetes’s case, or metaphorically in Electra’s. Where Job could not feasibly punish God, and was therefore left with only the choice between abandoning or maintaining his faith in the face of injustice, the world of arbitrary and human injustice opens a new avenue to end suffering: revenge. Electra immediately seizes on this as her only hope of salvation and sets the machinery to accomplish it in motion by sending Orestes off with Pedagogus after her father’s murder. However, this shifts her control of the revenge out of her hands and, while her communication with Orestes keeps the prospect close enough to obsess her, it also renders her entirely passive to his will. The chorus repeatedly rebukes her for her self-inflicted misery, claiming that nothing will assuage it once it has been too deeply entrenched. They say, â€Å"If past the bounds of sense you dwell in grief that is cureless, with sorrow unending, you will only destroy yourself, in a matter where evil knows no deliverance†¦Why do you seek it?† (Electr a, 140-145). Electra does not refute the truth of their speech, focusing instead on her admiration of those who cling to suffering. In contrast, whatever desire for vengeance Philoctetes has towards those who wronged him, he can only direct it through curses and appeals to the gods because he has no reasonable hope of punishing Odysseus and the Atridae himself. My Agony is More Noble Than Your Pain :: Essays Papers My Agony is More Noble Than Your Pain In a world where an infallibly righteous God oversees justice, the source of all human suffering is known and understood. While this may not make the pain of the punishment He assigns any less agonizing, it at least lends it clarity. When Job loses his family and his fortune, he immediately knows with whom to take up his case. However, in a world where the gods do not determine all human actions and exert their influence arbitrarily, one’s misfortune is wholly one’s own to bear, no matter how undeserved it may be. Sophocles emphasizes this human aspect of injustice in Electra and Philoctetes, placing both main characters in a position of undeserved suffering caused largely by human actions. Electra and Philoctetes are in a situation comparable to Job—they were wronged by powers mightier than themselves and bringing those powers to justice is an arduous or downright impossible task. Both characters must decide whether to cling to their suffering because it is just , at the expense of their humanity or their lives, or to relinquish it in order to rejoin society either literally, in Philoctetes’s case, or metaphorically in Electra’s. Where Job could not feasibly punish God, and was therefore left with only the choice between abandoning or maintaining his faith in the face of injustice, the world of arbitrary and human injustice opens a new avenue to end suffering: revenge. Electra immediately seizes on this as her only hope of salvation and sets the machinery to accomplish it in motion by sending Orestes off with Pedagogus after her father’s murder. However, this shifts her control of the revenge out of her hands and, while her communication with Orestes keeps the prospect close enough to obsess her, it also renders her entirely passive to his will. The chorus repeatedly rebukes her for her self-inflicted misery, claiming that nothing will assuage it once it has been too deeply entrenched. They say, â€Å"If past the bounds of sense you dwell in grief that is cureless, with sorrow unending, you will only destroy yourself, in a matter where evil knows no deliverance†¦Why do you seek it?† (Electr a, 140-145). Electra does not refute the truth of their speech, focusing instead on her admiration of those who cling to suffering. In contrast, whatever desire for vengeance Philoctetes has towards those who wronged him, he can only direct it through curses and appeals to the gods because he has no reasonable hope of punishing Odysseus and the Atridae himself.

The Growing Problem of Terrorism and Terrorists Essay -- Terrorists E

Individuals often establish belief systems in regard to attitudes, behaviors, religions, and other areas based on beliefs and practices that they accepted during the early stages of maturation when many of their interactions were influenced by their families, who both supported and practiced the same traditions. In America the customary stance toward these varied opinions is to view them with tolerance, regardless of how strange or wrong the belief or action might seem. While individually people may disagree with the beliefs of other people, under ordinary circumstances, most Americans would either offer friendly advice or completely ignore situations that would not lead to dangerous or deadly outcomes. However, it seems to me that some people within practically all groups, regardless of their designations, sometimes decide to carry their belief systems to the extreme. Extremists move into the category of fanatics or radicals who seek to establish their belief systems as the only means for achieving a desired outcome. When people become fanatics, they believe that their ideals are the only acceptable way to live. Some will seek to destroy others who do not believe or act as they do. At that point, extremists become terrorists because they try to force others to accept their practices in such areas as social behaviors, politics, and religion. Terrorists frequently want everyone to practice the same social behaviors. Dressing in a particular style, eating specific foods... The Growing Problem of Terrorism and Terrorists Essay -- Terrorists E Individuals often establish belief systems in regard to attitudes, behaviors, religions, and other areas based on beliefs and practices that they accepted during the early stages of maturation when many of their interactions were influenced by their families, who both supported and practiced the same traditions. In America the customary stance toward these varied opinions is to view them with tolerance, regardless of how strange or wrong the belief or action might seem. While individually people may disagree with the beliefs of other people, under ordinary circumstances, most Americans would either offer friendly advice or completely ignore situations that would not lead to dangerous or deadly outcomes. However, it seems to me that some people within practically all groups, regardless of their designations, sometimes decide to carry their belief systems to the extreme. Extremists move into the category of fanatics or radicals who seek to establish their belief systems as the only means for achieving a desired outcome. When people become fanatics, they believe that their ideals are the only acceptable way to live. Some will seek to destroy others who do not believe or act as they do. At that point, extremists become terrorists because they try to force others to accept their practices in such areas as social behaviors, politics, and religion. Terrorists frequently want everyone to practice the same social behaviors. Dressing in a particular style, eating specific foods...

Dickinson Vs. Whitman Essay -- essays research papers

Dickinson vs. Whitman After receiving five years of schooling, Walt Whitman spent four years learning the printing trade; Emily Dickinson returned home after receiving schooling to be with her family and never really had a job. Walt Whitman spent most of his time observing people and New York City. Dickinson rarely left her house and she didn't associate with many people other than her family. In this essay I will be comparing Emily Dickinson and Walt Whitman. Emily Dickinson's life differs greatly from the life of Walt Whitman, although they lived during the same time period. Walt Whitman published practically all his poetry during his lifetime, but Emily Dickinson only published seven of her poems during her lifetime. Actually, her poetry wasn't published until after her death. Both Whitman and Dickinson were poetic pioneers because of the new ideas they used in their poetry. Emily Dickinson did not write for an audience, but Walt Whitman wrote for an audience about several national events. The forms each poet used are different as well. The rhyme in the poetry by Whitman is drastically different from the poetry written by Dickinson, because Whitman didn't use any rhyme. Emily Dickinson grew up in Amherst, Mass, and Walt Whitman grew up in New York City, New York; this is one way that these poets' lives differ. The main people that influenced Emily Dickinson were Ralph Waldo Emerson and Emily Bronte. Walt Whitman was influenced by many people, some of which were: Elias Hicks, James Macpherson and William Shakespeare. Whitman read many book reviews by many people; from these, he realized Emerson was very influential. Whitman was also influenced by the Bible, his walks in New York City, Tom Paine, and a strong love for music. After Whitman started preparing to be a poet, he said he was merely "simmering," but the ideas of Emerson brought him to a "boil." Dickinson wasn't addressing anyone in particular through her poetry, but Whitman addressed the citizens of the United States, most of the time, through his writings. After reading "The Poet" by Emerson and seeing how he defined the role of the poet in democracy, Whitman was eager to assume that role. Whitma n loved to have his picture taken and there are many pictures of him. Dickinson only allowed her picture to be taken once and did so reluctantly. Neither Dickinson nor Whi... ...n wrote about the Civil War. Dickinson often wrote about death and nature. The punctuation is drastically different as well. Whitman used mostly traditional punctuation in his poetry, but in the poem "Beat! Beat! Drums!" he used a big amount of dashes: "Beat! beat! drums!-blow! bugles! blow! Through the windows-through the doors-burst like a ruthless force." Dickinson used a form of punctuation unique to her poetry as well as capitalization. She used irregular capitalization to emphasize certain words for example, in the poem "This is My Letter to the World," she capitalized the words, World, Me, News, Nature, Majesty, Message, Hands, Her, and Sweet. She did this because those things were important to her. Walt Whitman's and Emily Dickinson's lives were very different, although they lived during the same time period. Each poet chose to be around certain people and things. Those people and things they chose to be around greatly influenced their poetry. The forms and subjects are different because they liked writing about things that happened in their lives. They are both innovators in poetry because they chose to change common things in writing poetry.

Communication Opinion Paper

Communication Opinion Paper Christine Kendall HCS/320 November 18, 2012 Tralicia Brown Communication Opinion Paper Introduction Effective communication in health care is crucial for health care professionals, the patients and the establishment providing the care. It can mean the difference between life and death. When there is not enough communication within the health care industry, medical care will not be given effectively due to mistakes that will be made when things are not clear.When lives are at stake, effective communication is a must in the health care industry. Effective Communication and its Elements Effective communication involves more than understanding information that is being conveyed. How a person understands and receives a message are two different things therefore understanding feelings, thoughts, wants, and needs are crucial in effective communication (Cheesebro, O’Connor, & Rios, 2010). The success of every relationship whether it’s personal or pro fessional relies on a person’s ability to communicate effectively.Becoming a skilled communicator requires learning the elements necessary for effective public speaking, interpersonal relationships, and business relations. The four basic elements of effective communication are sender, receiver, message, and feedback. The first component is the sender/receiver which acts as a transceiver by speaking to someone and receiving nonverbal feedback simultaneously. â€Å"The message is the idea, thought, feeling, or opinion to be communicated† (Cheesebro, O’Connor, & Rios, 2010, chap 1).It is important to recognize not only the content of the message, but also the nonverbal communication that you may be sending as well. â€Å"Feedback is the receiver’s response to the message and indicates how the message is seen, heard, and understood, and often how the receiver feels about the message and/or the sender† (Cheesebro, O’Connor, & Rios, 2010, chap 1). Elements of Effective Communication and Rules of Health Care Communication Health communication is â€Å"the way we seek, process and share health information† (du Pre, 2005, pg 8).Health communication is based on personal goals, skills, culture, situational factors, and being considerate of other people’s feelings (du Pre, 2005). People are influenced greatly by other people and rely on others to help meet their goals. As du Pre (2005) explains health care providers have many goals such as patient health and showing their knowledge. Patient’s also have many goals when it comes to their health care such as wanting to get better and to be reassured. Whether or not these goals are met is based on effective health communication.Recognizing interdependence and that no one communicates alone has influence on the effectiveness of communication. Being friendly and honest will help others feel comfortable enough to be friendly and honest with you. People who communicat e well are sensitive to other people’s feelings and expectations. This includes listening carefully, being aware of other cultures and their personal preferences. Another example of effective communication in health is recognizing shared meaning. What an action means depends on the people and the circumstances involved† (du Pre, 2005, pg 8). This is usually based on how people respond to each other by smiling, nodding their head, or an angry look. This will let you know how people are responding to your conversation (du Pre, 2005). How to Communicate Candidly Effective interpersonal communication between a patient and a health care provider is one of the most important elements in patient satisfaction, compliance and the outcome of patient health.Despite this acknowledgement of the importance of interpersonal communication, in medical training the subject is not always emphasized. Effective interpersonal communication can lead to the patient offering enough information to lead to a diagnosis, the provider and the client both can discuss an acceptable treatment plan, the client and the provider are both committed to fulfilling their responsibilities during and after treatment (de Negri, Brown, Hernandez, Rosenbaum, & Roter, 2012).The following steps to effective communication and encouraging the client to communicate candidly include: encouraging a two-way dialogue, establishing a partnership between client and consumer, creating a caring atmosphere, bridging any social gaps between provider and client, accounting for social influences, effectively using verbal and non-verbal communication, and allowing the client enough time to tell their story (de Negri, Brown, Hernandez, Rosenbaum, & Roter, 2012). Cultural Differences and CommunicationExcellent cultural communication skills are beneficial to relationships with colleagues, clients, and customers and improve business performance. If challenges and opportunities are handled well when working with p eople from different cultural backgrounds, they can increase productivity, improve performance, innovation, and progress (Kaplan & Cunningham, 2010). There are a few tips when conversing with someone from a different culture which can increase your chances for being understood. These are: Know yourself and your own cultural Context. Read also: â€Å"Advice About Communication†Think about how your culture context impacts your communication style. Know your audience. Some cultures are more direct than others, speaking less verbally and rely more on nonverbal communication. Yes does not always mean yes. Respect English language barriers. When speaking to someone who does not speak English there are tips to make sure that you are being understood. These tips include: speak slower, avoid the use of slang words, take breaks in the conversation and don’t surprise people.Respect your audience and do not judge. Try looking at situations with different cultures as different not right or wrong. Ask questions to make sure they understand. (Kaplan & Cunningham, 2010). Conclusion Due to the fact that when there is not enough communication within the health care industry, medical care will not be given effectively, it is crucial for health care professionals to learn the skills necessary for effective communicati on. It can mean the difference between life and death.