My sister is pursuing MBA Program from BITS Pilani. She has got ‘Currency Derivatives’ topic to make Project report. She wants my help. So is there anyone who will provide sample project report on ‘Currency Derivatives’ for MBA Students?

As you want sample project report of ‘Currency Derivatives’ for MBA students, so here I am providing project report:

MBA Project Report on Currency Derivatives

Basics Of Derivatives
1. What are derivative instruments ?
2. What are Forward contracts ?
3. What are Futures ?
4. What is the difference between Forward contracts and Futures contracts ?
1.What are derivative instruments?
A derivative is an instrument whose value is derived from the value of one or more underlying, which can be commodities, precious metals, currency, bonds, stocks, stocks indices, etc. Four most common examples of derivative instruments are Forwards, Futures, Options and Swaps.

2. What are Forward contracts?
A forward contract is a customized contract between two parties, where settlement takes place on a specific date in future at a price agreed today. The main features of forward contracts are
They are bilateral contracts and hence exposed to counter-party risk.
Each contract is custom designed, and hence is unique in terms of contract size, expiration date and the asset type and quality.
The contract price is generally not available in public domain.
The contract has to be settled by delivery of the asset on expiration date.
In case, the party wishes to reverse the contract, it has to compulsorily go to the same counter party, which being in a monopoly situation can command the price it wants.

3. What are Futures ?
Futures are exchange-traded contracts to sell or buy financial instruments or physical commodities for Future delivery at an agreed price. There is an agreement to buy or sell a specified quantity of financial instrument/ commodity in a designated Future month at a price agreed upon by the buyer and seller. To make trading possible, the exchange specifies certain standardized features of the contract

4. What is the difference between Forward contracts and Futures contracts ?

Basis Futures Forwards
Nature Traded on organized exchange Over the Counter
Contract terms Standardized Customised
Liquidity More Liquid Less Liquid
Margin Payments Requires Margin Payments Not required
Settlement Follows daily settlement At the end of the period.
Squaring off Can be reversed with any Contract can be reversed only with the
member of the exchange. same counter-party with whom it was entered into.

Attached Files

MBA Project Report on Currency Derivatives.doc (477.5 KB, 355 views)