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Preface to First Edition I-5

Acknowledgement I-7

Contents Chapter-heads I-9

1
BASICS OF INVESTMENT

1.1 Investment 2 1.10 Unsystematic Risk 44

1.2 Features (or factors affecting) of 1.11 Expected Return (based on Capital
Investment 4 Asset Pricing Model) 45
1.3 Speculation 6 1.12 Impact of Taxes on Investment Return 46
1.4 Investment Environment 7 1.13 Impact of Inflation on Return from
Investment 47
1.5 Types of Investment (or securities) 10
TEST YOURSELF 63
1.6 Risk Return Trade off 21
THEORY QUESTIONS 63
1.7 Return 23
NUMERICAL QUESTIONS 64
1.8 Risk 32
PROJECT WORK 68
1.9 Calculation of Systematic Risk 41

2
INDIAN SECURITIES MARKET

2.1 Structure of Indian Securities Market 70 2.7 Regulation of Securities Market in

2.2 Role of Stock Exchange 73 India (SEBI) 85

2.3 Stock Exchanges in India 75 2.8 Latest Developments in Indian

Securities Market 92
2.4 Securities (Stock) Indices 78
2.9 Other Developments in Indian
2.5 Trading Mechanism on Exchanges 80 Stock Market since 1990 93
2.6 Sources of Financial Information 83 TEST YOURSELF 102
THEORY QUESTIONS 103

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3
ONLINE TRADING

3.1 Online Trading - An Introduction 106 3.7 View/Modify/Cancel an Order 126

3.2 Online Trading Mechanism 107 3.8 Product Types - Delivery-Based
3.3 Price quotations 108 vs. Margin Based Trading 127

3.4 Types of Orders 116 TEST YOURSELF 130

3.5 Order Conditions 121 THEORY QUESTIONS 131

3.6 Placing an order? 122 PROJECT WORK 132

4
STOCK VALUATION - FUNDAMENTAL ANALYSIS

4.1 Approaches to Security Analysis 134 4.4 Stock Valuation Models

4.2 Fundamental Analysis 135 (Valuation of Equity Share) 150

4.3 Company Analysis 137 TEST YOURSELF 159

THEORY QUESTIONS 159
PRACTICAL PROBLEMS 160

5
Stock Valuation - Technical Analysis

5.1 Technical Analysis 164 5.5 Pitfalls to avoid while investing 185
5.2 Basic Tenets (Propositions) of TEST YOURSELF 188
Technical Analysis 165 THEORY QUESTIONS 188
5.3 Tools of Technical Analysis 165 PROJECT WORK 189
5.4 Limitations of Technical analysis 184

6
Introduction To Mutual Funds

6.1 Mutual Funds 190 6.5 Limitations of Investing in Mutual

6.2 Evolution of Mutual funds in India 192 Fund 195

6.3 Establishment of Mutual funds 193 6.6 Types of Mutual Fund Schemes 195

6.4 Advantages of Investing in Mutual 6.7 Latest Developments Regarding

Funds 194 Mutual Funds 200
TEST YOURSELF 204
THEORY QUESTIONS 204
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7
Investing In Mutual Funds

7.1 Net Asset Value (NAV) 206 7.6 AMFI (Association of Mutual Funds
7.2 Types of Loads 208 in India) 214

7.3 Investing in Mutual Funds 209 7.7 CRISIL (Credit Rating Information
Services of India Ltd.) 216
7.4 Factors Affecting Choice of Mutual
Funds 210 TEST YOURSELF 226

7.5 List of Mutual Funds in India along THEORY QUESTIONS 227

with their Websites 212 PROBLEMS 227

8
Futures And Options

8.1 Introduction to Derivatives 229 8.5 Options 235

8.2 Classification of Derivatives 230 8.6 Financial Derivatives in India 239
8.3 Participants (or Traders) in TEST YOURSELF 242
Derivatives Market 231 THEORY QUESTIONS 242
8.4 Futures 232

9
TRADING IN FUTURES AND OPTIONS

9.1 Quotes in Futures market 244 9.5 Order Book & Position book 259
9.2 Quotes in Options market 247 9.6 Trading in futures and options
9.3 Types of orders in Futures and market 260
options market 255 TEST YOURSELF 265
9.4 Order Conditions 257 THEORY QUESTIONS 266

10
Commodity Derivatives
10.1 Commodities 268 10.6 Procedure for trading in commodity
10.2 Commodity Derivatives 269 derivatives 282

10.3 Evolution of Commodity Markets 10.7 Benefits and risks of dealing in

in India 270 commodity futures 284

10.4 Valuation of Commodity Futures 275 10.8 Trading on MCX Platform 286

10.5 How to use Commodity Futures? 277 10.9 Regulatory Framework 290
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10.10 Latest Development - Introduction THEORY QUESTIONS 294
of Commodity Options 291 PRACTICAL PROBLEMS 295
TEST YOURSELF 293 PROJECT WORK 297

11
CURRENCY DERIVATIVES

11.1 Introduction to Currency Market 299 11.7 Steps for Placing an order 310
11.2 Currency Derivatives – Concept 301 11.8 Basic Strategies in Currency
11.3 Currency Derivatives in India 303 Derivatives 315

11.4 Participants in Currency Derivatives TEST YOURSELF 322

Market 305 THEORY QUESTIONS 323
11.5 Trading Mechanism in Currency PROJECT WORK 324
Derivatives 306 B.Com (Hon.) 2016 SEM-II Generic
11.6 Contract Specifications 309 Elective in Commerce 325