India Fintech Festival 16 May 2018
In India Fintech Festival on 16th May 2018. The main points on highlight about finance might be agreements.
Derivatives
are agreements signed between two parties or more base their value on an
underlying financial assets. Financial assets can be called securities. Some
examples of underlying financial assets are bonds, shares, interest rate,
coupon rates, mortgage payments, stocks and currencies. Some derivatives can
also be swapping, future contracts, warrants, stock options and forward
contracts.
This
is a type of derivative that has its value affected by the underlying contract
performance.
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Stock
option is also an example or type of derivative that has its value derived from
the underlying stock
The
value of any derivative is based on or rely on the financial assets given. For
example the derivative stock options has its value depends on the financial
assets stock. If you are a derivative owner, it does not mean you are the owner
of the financial assets because immediately the loan is paid back, the
financial assets goes back to the owner which is debtor. You are just a
creditor or business owner who collects the debtor financial assets to serve as
a security in case the debtor don’t pay you your money back. Fintech conference India on 16th May 2018 will held in Mumbai.
There
are derivatives between two parties in which an individual provide the
commodity to be kept by the other party and serve as insurance. An example is a
derivative finance between a farmer and a miller. The two parties may agree on
a particular amount of a commodity to be sold after a given period of time
regardless of the price of that commodity at that period. This is a risk in
which one of the parties gain and the other one loses or the other one gains
and one of the parties loses depending on the value of the goods at that
period.
For example, a farmer who provides 10,000 bushel of wheat to be sold for
$3.67 per bushel agrees with the miller on the 10th of January, 2018
that at the end of end of February, 2018, the miller should buy the 10,000
bushel of wheat at that price regardless of the value of the wheat then. If the
value of the wheat should increase which means the price of the wheat in market
will also increase and at the end of February, 2018 the price of the wheat per
bushel has increased to $4.8. If the calculation is made after the miller has
bought the 10,000 bushel of wheat at the amount of $36,000 ($3.67*10,000), the
miller gains $1.13 profit per bushel ($4.67 – $3.67=$1.13) which favors the
miller when he sells the 10,000 bushel of wheat at the amount of $48,000
($4.8*10,000).
But if otherwise or way round in which the value decreases at
that same rate in reverse, the farmer gains $1.13 per bushel of the wheat
leaving the miller to lose. You should understand that the losing party does
not totally lose, he just lose the extra profit that should have come in for
him as the commodity price first given already has a profit rate attached to it
before giving it out. You can attend India Fintech Festival 16 May 2018 as per entry guidelines by authorities.
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As
earlier explained by the example given above, both the buyer and seller gains
depending on the value of the commodity at that particular period. For better
clarification, let me give another example. Mr. SALVARDORR of SALVARDORR
BUSINESS ENTERPRISES just start rearing poultry birds for the purpose of having
good sales at the end of six months. But for the fear of bird flu outbreak
after a month of rearing, he ran towards Mr. Thompson which is an investor in
Thompson Poultry Birds Company. They have a derivative that after five months
if the birds survive the bird flu outbreak, it would be sold at $100 each.
After five months when the birds are six months old and ready to be sold but
because of the bird flu disease outbreak which is still around, the price of
poultry birds are down to $80 per bird. The venue for Fintech festival 2018 on 16th May 2018 is Bandra Kurl complex, Mumbai.
But since Mr. SALVARDORR and Mr.
Thompson had signed a derivative agreement which has put Mr. Thompson in the
position of buying the birds either the price goes higher or lower. Mr.
SALVARDORR gains his money on the birds even when there is an outbreak which
makes derivative to be beneficial to him and not beneficial to investor. Also
if things are other way round, the investor gain while Mr. SALVARDORR loses.
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