Reg. No. : Question Paper Code : $1052 M.B.A. DEGREE EXAMINATION, FEBRUARY/MARCH 2016. Elective Financial Services Management DBA 1754 — FINANCIAL DERIVATIVES (Regulations 2007/2009) ‘Time : Three hours Maximum : 100 marks Answer ALL questions PART A — (10 x 2= 20 marks) 1. What is the difference between forward and future? 2. What are the underlying assets for a derivative instrument? 3. What do you mean by stock index future? 4. What do you mean by foreign currency futures? 5. Write down the four functions of SEBI for the regulation of derivatives 6. Define OTC derivatives. What do you mean by American Option? 8, Define Hedging. 9. What do you mean by marking to market? 10. Define Credit derivative. PART B — (5 x 16= 80 marks): 11. (a) (i) Derivatives are effective risk management tools. Comment on the statement. (ii) Highlight the various functions of derivatives and its significance. (8+8) Or (®) @ Discuss the growth and development of derivatives in the Indian context. (i) Briefly explain the different types of derivative along with their features. (+8)12, (@) b) 13. (a) ) 14. (a) (b) 15. (a) (6) @ Gi) @ Gi) a Gi) @ Gi) @ Gi) @ Gi) @ Gi) Describe the role of SEBI for the development of Indian Stock Market. 2 What are the prudential conditions and precautions mentioned by the SEBI for the derivative market? (+8) Or Discuss the legal aspect of derivative trading in India. Explain the recommendation given by the committees for allowing derivatives into Indian Stock market. (8+8) Explain what is meant by ‘basis risk’ when future contracts are used for hedging. Explain what is meant by a perfect hedge. (+8) : Or What do you mean by short hedge and long hedge? How is it helpful? ‘A fund manager has a portfolio worth$ 50 million with a beta of 0.87. The manager is concerned about the performance of the market over next 2 months and plans to use 3-months contracts on the S&P 500 to hedge the risk. The current level of the index is 1,250, One contract is on 250 times the index. The risk free rate is 6% per annum, and the dividend yield on the index is 3% per annum. The current 3 month future price is 1259. What position should be the fund manager take to hedge all exposure to the market over the next 2 months? (8+8) Discuss the difference between futures and option contracts, Write short notes on : (+8) (2) Vanilla option (2) Real Option. Or = “Options contracts are relatively more safe derivative instruments Explain how? Discuss binomial option pricing model. (+8) Discuss the procedure followed for the accounting treatment of derivative transaction. Explain the two ways through which credit default swap can be settled, (+8) Or Write short note on : @ a) Strategy for managing derivative exposure Interest rate swap. (+8) 2 $1052cane (ise amine Question Paper Code : 80052 M.B.A. DEGREE EXAMINATION, AUGUST 2015. Elective Financial Services Management DBA 1754 — FINANCIAL DERIVATIVES, (Regulations 2007/2009) ‘Time : Three hours Maximum : 100 marks SF AFAR oP ul. Answer ALL questions. PART A—(10 x 2= 20 marks) What is spot price? Explain the purpose of derivatives. ‘What is the need to regulate derivatives trading? What are the salient points in regulation of Indian derivatives? What is hedging? Explain the difference between arbitration and hedging. What is put option? When is a call option exercised? What are derivatives exposure? What is exposure? PART B— (6 x 16 = 80 marks) (a) Explain how the forward price is determined. What is the role of spot price in determining forward price? Or (&) Explain the futures trading mechanism. How is price determined in the futures market?12. 13, 14. 16. @) ) (@) ) “@) ) (a) © Critically examine the role of regulators in regulating the Indian derivatives market. = Or “Regulation ensures fairness to investors” ~ explain with relevant examples. Write short notes on (@ Internal hedging methods ® 4ii) Stock index futures. ® Or Write short notes on : () Foreign currency futures ®) (i) Long term interest rate futures. ® Explain pricing of option using Black scholes model. Or Write short notes on : (@) — Swaption # ® (i) Financial swaps. ® Explain the basic accounting treatment of derivative transactions. Or Explain features and use of any two innovative derivative products. 2 80052Reg. No. : | ea Question Paper Code : 96052 M.B.A DEGREE EXAMINATION, FEBRUARY/MARCH 2014. Elective Financial Services Management DBA 1754 — FINANCIAL DERIVATIVES (Regulations 2007-2009) ‘Time : Three hours Maximum ; 100 marks 10. ll. Answer ALL questions. PART A — (10 x 2= 20 marks) Define derivative. Distinguish between forward and futures market. State any two major provisions of Forward Contract (Regulation) Act, 1952. List any four points related to regulation of derivatives in India. Define index futures. What is the difference between long and short forward position? Explain Option premium. What is plain vanilla interest rate swap? What is hedge accounting? Define MIBOR and LIBOR. PART B —(6 x 16= 80 marks) (a) Differentiate the pricing of financial futures and commodity futures. Elaborate the mechanisms involved. Or (b) Briefly explain the various functions of derivatives market and types of players.12, 13. 14. 15. (a) b) (a) (b) (@) (b) @) (b) Explain the measures specified by SEBI to enhance protection of rights of investors in derivatives market. Or Give the major recommendations of LC Gupta Committee. “Hedging is to provide insurance against adverse fluctuations in the price monuments.” Do you agree? Discuss the statement with the help of suitable examples. Or A corporate treasurer intends to borrow money in the middle of May for a three months period. The treasurer may fear that interest rates might have risen by the data of borrowing. Since a rise in interest rates would add to the cost of borrowing, a futures position is taken so that there would be on offsetting profit in the event of rise in interest rate. Three months interest: rate futures are quoted on index basis, Index is 100 ‘minus the futures interest rate. So futures interest rate of 6.5% pa. would entail a quote of 100-6.5=93.5%. The amount of borrowing is Rs. 5,00,000. Show the position of treasurer from futures contract. Suppose the interest rate stands at 6.5% and on May interest rate rises to 8%. Briefly explain the Intrinsic value of option and Time value of option. Or “Options are the safest instrument for the investors for investment purpose.’ Examine critically the statement. Write in detailed note on classification of financial instruments for accounting purposes. Or Explain the interest rate caps. What are various types of caps? Also discuss the various terms used in interest rate caps and floors. 2 96052Reg. No. : | ea Question Paper Code : 96052 M.B.A DEGREE EXAMINATION, FEBRUARY/MARCH 2014. Elective Financial Services Management DBA 1754 — FINANCIAL DERIVATIVES (Regulations 2007-2009) ‘Time : Three hours Maximum ; 100 marks 10. ll. Answer ALL questions. PART A — (10 x 2= 20 marks) Define derivative. Distinguish between forward and futures market. State any two major provisions of Forward Contract (Regulation) Act, 1952. List any four points related to regulation of derivatives in India. Define index futures. What is the difference between long and short forward position? Explain Option premium. What is plain vanilla interest rate swap? What is hedge accounting? Define MIBOR and LIBOR. PART B —(6 x 16= 80 marks) (a) Differentiate the pricing of financial futures and commodity futures. Elaborate the mechanisms involved. Or (b) Briefly explain the various functions of derivatives market and types of players.12, 13. 14. 15. (a) b) (a) (b) (@) (b) @) (b) Explain the measures specified by SEBI to enhance protection of rights of investors in derivatives market. Or Give the major recommendations of LC Gupta Committee. “Hedging is to provide insurance against adverse fluctuations in the price monuments.” Do you agree? Discuss the statement with the help of suitable examples. Or A corporate treasurer intends to borrow money in the middle of May for a three months period. The treasurer may fear that interest rates might have risen by the data of borrowing. Since a rise in interest rates would add to the cost of borrowing, a futures position is taken so that there would be on offsetting profit in the event of rise in interest rate. Three months interest: rate futures are quoted on index basis, Index is 100 ‘minus the futures interest rate. So futures interest rate of 6.5% pa. would entail a quote of 100-6.5=93.5%. The amount of borrowing is Rs. 5,00,000. Show the position of treasurer from futures contract. Suppose the interest rate stands at 6.5% and on May interest rate rises to 8%. Briefly explain the Intrinsic value of option and Time value of option. Or “Options are the safest instrument for the investors for investment purpose.’ Examine critically the statement. Write in detailed note on classification of financial instruments for accounting purposes. Or Explain the interest rate caps. What are various types of caps? Also discuss the various terms used in interest rate caps and floors. 2 96052‘Time : Three hours 12 Reg.No.:{_| | | es ese Question Paper Code : 86052 M.B.A. DEGREE EXAMINATION, AUGUST 2013. Elective Financial Services Management DBA 1754 — FINANCIAL DERIVATIVES (Regulation 2007/2009) Maximum : 100 marks Answer ALL questions. PART A — (10 x 2= 20 marks) Define a concept of forward and futures contract, What is meant by the concept of cash settlement? What is an arbitrage position? What do you understand by the term "Covered Interest Arbitrage"? What does marked to market mean? Difference between the direct and indirect exchange rate quotations. What is the effect of an unexpected cash dividend on a call option price? How is the price of swap quoted? What do you understand the term Vega risk? What is the difference between transaction exposure and translation exposure? PART B— (6 x 16 = 80 marks) (a) Explain how the future market can be used for speculation Or (b) Bring out the advantages of the forward rate agreements and what principle governs their pricing. (a) Explain in detail about the derivative trading in India, Or (b) Briefly discuss the role of SEBI in the Indian Capital Market.13, 4 @) (b) (a) (b) (a) (b) Explain how stock index futures are used for adjusting the beta value of portfolio () upward and (i) downward Or < What do you understand by beta of a security? Explain’the method of its caleulation, Explain the black Scholes model with suitable example. Or Explain the following strategies : @) Short stock long call (a) (ii) Long stock long put : (4) (iii) Long stock short call (a) (iv) Short stock Short put @ Explain the difference between a regular credit default swap and a binary credit default swap. Or Explain why delta hedging is easier for Asian options than for regular options. 2 86052Reg. No.: E Question Paper Code : 86052 M.B.A. DEGREE EXAMINATION, FEBRUARY/MARCH 2013. Elective Financial Services Management DBA 1754 — FINANCIAL DERIVATIVES, (Regulation 2007/2009) ‘Time : Three hours Maximum : 100 marks 10. 1. Answer ALL questions, PART A — (10 x 2= 20 marks) Define future contract. What does derivatives refers to? List any four regulatory objectives of I.C. Gupta committee, What are the advantages of rolling settlement? Distinguish between stock and index futures, Write in short about “Performance bond margin”. Distinguish between Option and Futures. What is accreting swap? What is an EEFC Account? Define credit derivatives. PART B— (6 x 16 = 80 marks) (a) Describe the advantages of future contract over forward contract. or : (b) How are derivatives categorized? Discuss the various functions and advantages of derivatives market.12, 13, 4. 16. (a) ) @) ) @) ©) @ &) Explain the growth and development of derivatives market in global and domestic level. Or Give the regulations of forward and futures trading in India. Explain the various hedging strategies. Or ‘The current stock price is Rs. 100. The stock can increase or decrease by 10% per period. The risk free rate is 5% per period. Using the BOPM show at each node of the binomial tree, the stock price and the value of a European put which expires in two periods and has a strike price of K= Rs, 100, Also, calculate the hedge ratio at each node and show that the hedged portfolio has the same values at the two nodes at t= 1. Briefly explain option pricing models with example. What are the variables needed in this model to calculate the option price? Or Discuss the nature of currency swaps and explain different types of currency swaps. Discuss the concept of derivative for accounting purpose. How derivatives is treated in accounting record? Explain with examples. Or What is the need for hedging accounting in derivatives transactions? Discuss the various issues that are relevant in India as for as accounting for derivatives are concerned. 2 86052Reg. No.: [ L Question Paper Code : 75552 M.B.A. DEGREE EXAMINATION, AUGUST 2012, Elective Financial Services Management DBA 1754 — FINANCIAL DERIVATIVES (Regulation 2007/2009) Time : Three hours Maximum : 100 marks Answer ALL questions. PART A — (10 x 2 = 20 marks) Explain the features of derivatives. 2. What are financial derivatives? 3. What is Badla system in Indian stock market? 4, Explain the trading systems in India. 5. What is hedging? 6. What is the purpose of hedging? 7. Discuss the differences between options and futures. 8 What are ‘call’ and ‘put’ options? 9. _ Explain features of ‘swaptions’. 10. How is taxation of derivatives done in India?PART B — (5 x 16 = 80 marks) 11, (a) () What are the features of ‘futures contracts’? (i) What are the uses of derivatives? (+8) Or (b) (Write a short note on growth of futures market. (i) Explain the functions of futures market. (8+8) 12, (a) (i) Explain the prudential conditions and precautions (1995) recommended by SEBI. (ji) Discuss the salient recommendations of J.R. Varma Committee (1997). (8+8) Or (b) @ Discuss the eligibility conditions for entering derivatives trading. (i) What are the exposure limits prescribed by SEBI? (+a) 13. (@ (Explain the issues in pricing currency forward contracts. Gi) What is ‘Covered interest rate parity’? (+8) Or (b) () How is hedging monitored? (i) On March 20, 2 company X negotiated a contract to sell 2 million barrels of oil. It is agreed that the price that will apply in the contract is the price on August 20%. Company is in a position whereby it will gain Re. 1,000 for each 1% increase in price of oil and will lose Rs. 1,000 for each 1% decrease in price of oil. Suppose the spot price on March 20 is Rs. 30 per barrel and August oil futures price on commodity exchange is Rs, 29 per barrel. Explain how the strategy works if contract on commodity market is for delivery of 200 barrels. (+8) 14. (a) Discuss the determinants of option prices. Or (b) Explain the Black-Scholes option pricing model. 2 7555216. (a) Write short notes on (i) Interest rate options (ii) Interest rate caps. (+8) Or (6) Write short notes on (Accounting treatment of derivative transactions (ii) Credit derivative instruments. (+8) 3 75552Reg. No. Question Paper Code : 85552 M.B.A. DEGREE EXAMINATION, FEBRUARY 2012. Elective DBA 1754 ~ FINANCIAL DERIVATIVES (Regulation 2007/2009) ‘Time : Three hours Maximum : 100 marks 10. lL. Answer ALL questions. PART A — (10 x 2 = 20 marks) Differentiate a future from an option. What do you mean by rolling over of forward contract. List out four recommendations of Varma committee on derivatives. Differentiate badla from a forward trading. What do you mean by stock index futures? Give examples. What do you mean by short hedging? What is the money put and call options? Explain long position in put option with an example. Define a financial asset as per IAS 32. What are derivative exposures? PART B — (6 x 16 = 80 marks) (a) List down the functions of the derivatives market and the criticisms of the market. Or (b) List down and explain in detail the different types of players in the derivatives market.12. 13. 14. 15. (@) ) (a) ) (@) ) @ (b) List down and explain the major recommendations given by Gupta committee, Or Discuss the various measures specified by SEBI to enhance protection of rights of investors in the derivative market. Explain the forward foreign exchange market. What are its important features? Explain with suitable examples Or Discuss the concept of duration with respect to bonds and also discuss the importance of duration with respect to interest rate risk management. Distinguish between spread, straddle and strangle option strategies and compare them with examples. Or Discuss the black scholes option pricing models with suitable examples. Explain List down and explain the various credit derivative instruments. Or Discuss the accounting treatment of derivative transactions. 2 855526. 10. ‘Time : Three hours Reg. No. Question Paper Code 95552 M.B.A. DEGREE EXAMINATION, AUGUST 2011. Elective DBA 1754 — FINANCIAL DERIVATIVES (Regulation 2007/2009) Maximum : 100 marks Answer ALL questions. PART A — (10 x 2= 20 marks) Examine the role of derivatives market. What is a forward contract? Examine the status of the derivatives market in India. What is the need for regulation of derivatives trading? What are stock index futures? What is the rationale for use of short term interest rate futures? What is a ‘currency swap’? Distinguish between ‘swap’ and ‘option’. What are credit derivatives? Write short note on “Weather Derivative’.ll. 12. 13. 14. 15, (a) b) @) © (a) ) @) (b) (@) b) PART B—(5 x 16 = 80 marks) Discuss the mechanics of futures trading. Or What are the transaction costs in the forward markets? How does the over- the - counter forward market operate? Critically examine the regulatory framework for derivatives market in India. Or Discuss the major recommendations of the LC Gupta committee related to derivatives trading in the Indian Context. Explain the reasons why firms hedge. What are the hedging strategies used? Or Write notes on: (Short term interest rate arbitrage (ii) Foreign currency futures. Explain the Black-scholes model for pricing options. Illustrate with example. Or Discuss how risks of options can be managed. How is volatility estimated? Briefly discuss the issues in risk management accounting. What are the G-30 recommendations on accounting policies and disclosures pertaining to derivatives? Or Write notes on: @ Equity Forwards (ii) Exotic Options. 2 95552Reg. No. : I Question Paper Code: 85552 M.B.A. DEGREE EXAMINATION, FEBRUARY 2011. Elective DBA 1754 — FINANCIAL DERIVATIVES (Regulation 2007) ‘Time : Three hours Maximum : 100 marks 10. 1 Answer ALL questions. PART A — (10 x 2 = 20 marks) What is a credit derivative? ‘Why do companies hedge risk using derivatives? Explain about interest rate swaps. Distinguish between call option and put option. What is commodity futures? What is vego and rho? What are index options? What is forward trading? ‘What are the hedging schemes? What is risk aversion? PART B — (6 x 16 = 80 marks) (a) Explain the derivatives market in India. Or (b) What advantages futures contract has over forward contract? Explain with suitable example.12. 13. 14. 15. @) (b) (b) (@) () (@) (b) Discuss the various risk containment measures in the Indian derivative market as per the recommendations of Dr. J.R. Varma Committee. Or In futures market, cotton contract has a standard contract size of 5000 bushels of cottons, What advantages does this have over the well-known forward market practice of negotiation case-by-case basis? What disadvantages does standarized contract size have? Under what circumstances are a short hedge and a long hedge appropriate? Explain with examples. Or “Stock index futures as the powerful tool or risk management used by mutual funds and pensions fund and investment companies ”. Explain the statement. What is Black-Scholes model for call options? Explain. Or ‘An investor has a short position in put option. Option price is $7 , strike price is $70 and stock current price is $ 65. Draw a position of the investor by writing a European put option on one share. Discuss the concept of derivative for accounting purpos is treated in accounting record? Explain with examples. How derivatives Or With the help of the hypothetical examples, draw out pays off profile of a cap purchase. 2 85552Reg. No. : Question Paper Code : 85552 M.B.A. DEGREE EXAMINATION, FEBRUARY 2011. Elective DBA 1754 — FINANCIAL DERIVATIVES (Regulation 2007) ‘Time : Three hours Maximum : 100 marks Answer ALL questions. PART A — (10 x 2 = 20 marks) 1, Whatis a credit derivative? 2. Why do companies hedge risk using derivatives? 3. Explain about interest rate swaps. 4, Distinguish between call option and put option. 5. What is commodity futures? 6. What is vego and rho? 7. What are index options? 8. What is forward trading? 9. What are the hedging schemes? 10. What is risk aversion? PART B — (5 x 16 = 80 marks) 11. (a) Explain the derivatives market in India. Or (b) What advantages futures contract has over forward contract? Explain with suitable example.Reg. No. : Question Paper Code: GG 1552 M.B.A. DEGREE EXAMINATION, AUGUST 2010. Elective DBA 1754 — FINANCIAL DERIVATIVES, (Regulation 2007) ‘Time : Three hours Maximum : 100 marks a: 10. 1. Answer ALL questions. PART A — (10 x 2 = 20 marks) What are Derivatives and its types? Differentiate between forward and future contract. What is “price—time priority”? List out any four points regarding regulation of derivatives in India. Define interest rate future and currency future. What are options? What are its types? What do you understand by marking to market? When does one need to hedge? Give some example. What is a swap? What do you mean by the term MIBOR and LIBOR? PART B— (5 x 16 = 80 marks) (a) How are derivatives categorized? Discuss the various functions and advantages of a derivatives market. Or (») Explain the pricing mechanisms of future and forward contract with suitable example.12, 13. 14. 15, fa) ) fa) (b) (a) ) (@) ) How is the derivatives market regulated in India? Explain in the light of measures initiated by the Government. Or Explain the growth and development of derivatives market in Global and domestic level. What is a hedging and hedge ratio? What are the hedging strategies used by individuals and corporate investors? Discuss with example. Or Explain interest rate future contract and currency future contract. Discuss its origin and growth in India. Briefly explain option pricing models with example. What are the variables needed in this model to calculate the option price? Or Discuss different types of option trading strategies, What is the need for hedging accounting in derivatives transactions? Discuss the various issues that are relevant in India as for as accounting for derivatives transactions are concerned. Or Briefly explain the credit derivatives. 2 GG 1552Reg. No.1 1 TTI M.B.A. DEGREE EXAMINATION, FEBRUARY 2009. Fourth Semester — Elective DBA 1754 — FINANCIAL DERIVATIVES (Regulation 2007) ‘Time : Three hours Maximum : 100 marks Answer ALL questions. PART A — (10 x 2 = 20 marks) 1. What are derivatives? 2. Define synthetic futures. 3, State the major provisions of Forward contracts (Regulation) Act, 1952. 4, State the special features of Bombay Forward contract control Act, 1947. 5. What is the difference between a long forward position and a short forward position? 6. Why do future and forward prices differ? 7. _ Define ‘Rainbow option’. 8. Explain option premium. 9. Define ‘Hedge accounting’. 10. State the criteria for the statement of recommended practice (SORP). PART B — (6 x 16 = 80 marks) 11. (a) Bring out the differences between speculation and hedging. Or (b) State and explain the mechanics of financial futures markets.12. 13. 14. 16. (a) (b) (@) (b) (a) (b) (a) (b) Explain the features of an over-the-counter market. What are the advantages of OTC contracts via-a-vis exchange traded contracts? Or ‘Assess the regulation of forward and futures trading in India. Bring out the differences between : (i) Bull call spread and a bull put spread ; and (ii) Iron butterfly and a regular butterfly. Or ‘Assume you hold a T-bill that matures in 91 days, when the T-bill futures expires. Explain how you could transact to effectively lengthen the maturity of the bill, Discuss the procedure for calculating the value of a call option as per the Black and Scholes model. Or Discuss the difference between credit risk and market risk. Is it possible to hedge credit risk? Explain, Discuss the appropriate accounting treatment for various derivative transactions. Or “Hedge transactions are easy to identify and that hedge accounting is straight forward and simple to carryout. Unfortunately real life is far more complicate” — Discuss. 2 Z 1552ag Na. LLL 1652) MBA. DEGREE EXAMINATION, AUGUST 2009, Elective DBA 1754 — FINANCIAL DERIVATIVES ogulation 2007) ‘Time : These hows Mesimm : 100 marks Answer ALL questions PART A—(10%2 = 20 marks) 1. State the most important wae of derivatives, 2, Distinguish between Futures and Forward Markets, 8. Whats Badla Trading? 4. Give the nvantages of Rolling Setement, 5. Define Index Option ©. Whetin Expiration date? 7. What are carry type commodities? 8 When short selling strategy used? 9. Define exodit derivatives, 10. Whats derivatives Exposure? PARE — (516. 0 mark) 12, (@) Future contracts are improvised forward contracts — Do you agree? Explain. or (8) How is pricing of commodity futuros different from pricing of financial futures? Describe the mechaniata involved.12, 13. 1 6. @ o o © @ © ‘Write a note on derivatives trading in India. or ‘Briefly explain the regulation of financial derivatives in Indi. Differentiate bebweon call and pat options, What are the rights and obligations ofthe holders of long and short positions in them? or ‘Show graphically the call and put option pricing (atexpiration and }) before expiration indicating cloarly the intrinsic and time valve ‘componente of the option values, Am investor bets « substantial change i the price of a stock bul is not jsure of the direstiona in which the change would take lacs. What ‘Hiferent strategies involving options could be adapted? Compare the strategies or Buplain the following Hedging Steatagion (Short Stock Long Call i) Long Stock Long Put Lang Stock Short Call Shoot Stock Short Pat Dicuss the accounting trestment of Derivatives transactions, or Wirite a note on advanced financial dorvatives, 2 LL 1602Reg. No. | I Question Paper Code : YY 1552 M.B.A. DEGREE EXAMINATION, FEBRUARY 2010. Elective DBA 1754 - FINANCIAL DERIVATIVES (Regulation 2007) ‘Time : Three hours Maximum : 100 marks gs 10. i. Answer ALL questions. PART A—(10 x 2 = 20 marks) Define forward contract. What is financial derivative? List any two regulatory objectives of I.C. Gupta committee. List any two eligibility requirements for choice of stocks on which derivative contract are traded. Define short hedge. What is cross hedging? Differentiate strip from strap. What do you mean by the term LIBOR? What is CDO? ‘What are credit derivatives? PART B — (6 x 16 = 80 marks) (a) What is the difference between the forward price and the value of a forward contract? Explain. Or (b) Explain why a forward contract can be used for either speculation or hedging.12, 14, 16. (a) (b) @ (b) (a) (b) (a) () “Derivatives are well regulated in India”-Discuss. Or Explain the growth and development of derivative market in India. Explain what is meant by a perfect hedge. Does a perfect hedge always lead to a better outcome that an imperfect hedge? Explain your answer. Or How is hedging using T-Bill futures different form hedging using FRAs? Explain. How are the swap flows in a plain vanilla swap determined? Explain in detail. Or Explain how an aggressive bear spread can be ereated using put options. “Credit derivative is a new promise for the Indian Banking Industry”. Comment. Or What is hedging accounting? What are the problems and challenges in implementing the hedging accounting in India? Discuss.