In the beginner's mind there are many possibilities, in the expert's mind there are few.
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A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him.
He is not an interruption of our work. He is the purpose of it.
He is not an outsider to our business. He is part of it.
We are not doing him a favour by serving him. He is doing us a favour by giving us the opportunity to do so.
Mahatma Gandhi
‘Overallotment facility’ shall mean a clause in the underwriting agreement or lead management agreement which permits acceptance of subscriptions or offers to purchase greater number of relevant securities than originally offered.
‘Greenshoe option’ shall mean an option granted by the offeror in favor of the investment firm(s) or credit institution(s) involved in the offer for the purpose of covering overallotments, providing that for a certain period of time after the offer of the relevant securities such firm(s) or institution(s) may purchase up to a certain amount of relevant securities at the offer price.
Derivatives
Derivatives is a generic term used to describe futures, options, swaps and various other similar transactions. Apart from interest swaps, most derivative contracts are contracts for differences – the difference between the agreed future price of an asset on a future date and the actual market price on that date.
Futures Contracts
A futures contract is a contract under which one party agrees to deliver to the other party on a specified future date (the “maturity date”) a specified asset at a price (the “strike price”) agreed at the time of the contract and payable on the maturity date. The term “forward contract” is often used in relation to private contracts not transacted through an organised exchange.
The asset may be a commodity or currency or a debt or equity security (or a number or basket of securities), or a deposit of money by way of loan, or any other category of property.
The effect is to guarantee or “hedge” the price. The hedging party protects himself against a loss but also loses the chance to make a profit.
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