COMPARATIVE ANALYSIS OF CASH MARKET AND DERIVATIVE MARKET
Authors: Dr. Keyur M Nayak
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The study aimed to analyze the comparison between cash market and derivatives. The study also attempts to provide the insight on the hedging tools in the hands of Indian investors. The cash market is a commodities or securities market in which goods are sold for cash and delivered immediately. Contracts bought and sold on these markets are immediately effective. Cash markets can operate wherever the infrastructure exists to conduct the transaction. The spot market for most securities exists primarily on the Internet. Derivatives are the most dynamic, complex and multifaceted products in the modern financial management. They offer risk transfer facility for hedgers, give leverage to do more turnover for speculators, help the market players to cash the arbitrage opportunities between cash and Future and Options, among future and options segment. It is a product whose value is derived from the value of one or more basic variables, called bases (underlying asset, index, or reference rate), in a contractual manner. The underlying asset can be equity, forex, commodity or any other asset. The price of this derivative is driven by the spot price of the “underlying”. The research methodology to be followed is the Descriptive study and Exploratory Study. The data used in this is both primary and secondary type. The method of primary data collection is with the help of a Structured Questionnaire.