Leadership programs in First National Bank

Initiative projects in First National Bank The specialist expects to introduce the instance of Leadership programs in First National Bank in a South African setting. The initiative of First National Bank is Inspirational like numerous other South African associations anyway the endeavor of change has made the fascinating in the perspective on analyst. Analyst has likewise provoked a novel style of exploration technique that can best portray the case with most extreme handy information and executions examinations of different administration perspectives. A methodological plan is shaped by the analyst basing on the issues like information sources and strategies for information age that are conceivably accessible, and the Ontology of the techniques that the scientist had arranged a structure with. The possibility of the scientist in utilizing the group Ontology is to get the idea of the real world and human conduct, anyway absence of positivism despite everything exists in Ontology. Different logical strategies and methods are thought about by the analyst to all the more likely present the case issues. As per the scientists methodological structure the worldview, procedure, techniques and discoveries is discovered both subjective and quantitative. Consolidating strategies by blending subjective and quantitative techniques is getting progressively mainstream in authority research just as in different orders (Klenke, 2008). There are hypotheses drawn by different creators basing on the reasons, sources and examinations. Kezar (2002) proposes Positionality hypothesis to investigate how sexual orientation, race/ethnicity, level of manager, and the job of a pioneer inside the association influence the manner in which the pioneer develops pictures of initiative. Positionality hypothesis Creator Reason Information sources Examination Kezar (2002) To look at how positionality (for example race, sexual orientation, and so forth) identify with the development of authority Meetings, record investigation, reports, perceptions, examination of physical condition Interpretive Basing on the positionality hypothesis, it is comprehended that the specialist have followed the structure of the methodological plan with an interrelation of subjective and quantitative exploration. There are 5 fundamental advances followed by the scientist in the exploration procedure: Characterizing research questions and examination technique Examination techniques basing looking into the issue determination Configuration research instruments Gathering and coding essential information Investigating essential and optional information and decipher discoveries The writing audit of the analyst has all significant certainty discoveries about the exploration subject and built up solid foundation information about various hypothetical ideas. The analyst was fruitful in accomplishing triangulation of exploration strategies by utilizing every significant datum assortment techniques like perception, interviews, record investigation. It is guarantee by the specialist that the triangulation of information sources was followed in every one of the three unique advances: Management issues, glancing FNB in a greater setting FNBs inner issues. A diagram of Leadership in Organizations South African Leadership and its Styles: Initiative is broadly talked about and concentrated however keeps on staying a subtle and cloudy point. Realizing initiative is consistently when it is experienced (Rosenbach, 2006). Bratton characterizes administration as affecting, persuading and empowering others to contribute toward the adequacy and accomplishment of the associations of which they are individuals (Bratton, 2007). The significance of idea of authority has begun expanding it esteem in present day times in associations particularly when the associations are worried in creating solid work culture, and building elite feasible work rehearses. There have been numerous contentions about the interrelationship among the executives and authority capacities; the executives is related with words like arranging, sorting out, planning actualizing where as administration spin around vision, magnetism, change specialist and inspiration. Customarily there are 2 kinds of authorities; Transactional Leadership and Transformational Leadership. (Taylor, 2006) Value-based Leadership: It is the fair exchange or trade among pioneer and devotees where by the pioneer impacts the adherents by concentrating on the personal matters of both. Value-based administration is considered as acceptable administrative authority ability that is utilized basing on the circumstances that can bring about great execution. Transformational Leadership: The transformational pioneer rouses devotees to perform past desires by making mindfulness about the significance of vision and mission. Transformational pioneers empower adherents to change reason without hesitation. Singular associations like to pick they style of initiative basing on the associations culture and condition. As indicated by Matthew Valle; WLQ Report [Accessed on twelfth December 2010] Administration process in stable condition: Administration Processes Train laborers to foresee issues Results Performance Satisfaction Absenteeism Turnover Expectant culture Work Processes Anticipatory culture Routine Problems Stable condition Administration process in violent condition Administration Processes Train laborers to adjust to issues Routine Problems (emergency) fierce condition Results Performance Satisfaction less Absenteeism less turnovers Expectant culture Work Processes Adaptive culture (Mathew Valle, 2002) In this way of the open associations are working in tempestuous conditions, the need of study in a balancing out condition requests authority procedures to hold the control in like manner. Since 1994 South Africa has encountered sensational changes both on a political just as financial front, realized by globalization just as another political administration in SA. Segregation during the politically-sanctioned racial segregation period avoided Africans, Asians and Coloreds from the economy, bringing about minimal hierarchical administration aptitudes improvement among prohibited races. After Democracy in 1994, work enactment was executed to change the disparities in the public eye; these measures incorporate, among others, Affirmative Action. Further confusing the current authoritative condition is: South Africa is a mix of the first and third world economy. The deficiency of gifted African laborers/supervisors, with worthwhile contributions particularly African guys, lead to work jumping. Defilement, nepotism and culturalism. (To select from own way of life, head of a clan acquired by birth not founded on administration aptitudes), political arrangements, observations and generalizing along racial and sexual orientation lines have high effect on the authoritative initiative disposition.. Every one of these components impact the sort of administration that is named and how decent variety is overseen in the cutting edge South African associations. Other social issues, for example, changes in instruction, wellbeing frameworks, HIV/AIDS, lodging, destitution, expanded crime percentage and numerous others, influencing the association and worker that work inside this social system. As indicated by Tinus Burgers, (Burgers, 2003) South Africa is simply starting to wake up from the post 1994 happiness where whites were urgently attempting to extend their darkness through toyi-toying and singing Shosoloza while individuals of color incorrectly accepted that white stuff will basically vanish. There are still extremely profound felt contrasts and doubt between races making administration in differing associations exceptionally testing. After law based decisions in 1994 authorizations against South Africa were lifted. South Africa rose as a worldwide player that needs to adjust to worldwide patterns so as to be serious. The quickened pace of innovative advancement requires brisk modification and the need to move away from customary administration rehearses. The impact of innovation (electronic systems, cell phones, and so forth.), rises above national, geological, time and hierarchical limits, increment in accessibility of data, impacts workers and authoritative conduct as representatives need to confront enormous and quickened changes (Weeks, 2003). These fast changes in the worldwide condition and the South African circumstance tested the entertainment of society at all levels. As indicated by Nkomo this amusement ranges from people changing personalities and jobs to the change of significant social foundations and money related establishments. In aggregate, the administration challenge for South African associations is: Retiring old speculation frameworks in corresponding with making new ones against the truth of rapid globalization and informationalism (Nkomo, 2004). The African model of initiative varies from that of the West. Independence and personal circumstance are docile to ethnicity and gathering reliability. Relational relations are set above individual accomplishments. Riches is above all else more distant family riches and afterward ethnic or ancestral riches, regularly to the cost of the association (Blunt, 1996). Ethnic cleavages can influence the exhibition of the association. Initiative is paternalistic of nature. Pioneers give favors and expect and get dutifulness and respect, with accord assuming a significant job in dynamic bringing about dynamic inside levels to be taking quite a while. There is likewise an incredible limit with regards to resilience and absolution (Blunt, 1996). It was discovered that the initiative style in Africa is tyrant, customized, politicized and a powerful separation, with power amassed at the top. In this specific situation, the pioneers work gets one of operationalising headings got from above, making them understood to subordinates and giving counsel and backing. African pioneers are along these lines overwhelmingly worried about the nature of progressive relationship with their bosses, instead of with individual or hierarchical viability. This level of reliance on seniors by the more junior people is viewed as ordinary (Blunt, 1996). There is a manly predominance over every ethnic gathering. Administrative philosophies t

The Scarlet Letter - Punishment And Death Essays - Film,

The Scarlet Letter - Punishment and Death Hawthorne's The Scarlet Letter manages numerous subjects, among those counting discipline and demise. Using the topic of discipline, the focal character, Hester Prynne, had to wear a weaved red letter on her chest for an incredible remainder as an indication of her transgression of infidelity. This item; in any case, has the contrary effect as a discipline and as individuals of the network start to overlook the first noteworthiness of the letter it comes to tolerate another significance, capable. In the thirteenth part of this book, Hawthorne comes out and as an outsider looking in states the red letter had not done its office. Hester has gone past the apparent aim of the law and done everything inquired of her. She turns out to be a significant well known needle worker, proclaimed everywhere throughout the town of Boston for her work. She herself wears just boring garments of customary apparel, rebuffing herself with modesty. There is just one bit of apparel that she is taboo to make, the wedding vail, it is accepted that she can not in any way, shape or form speak to the estimations of a marriage. It would be generally inappropriate to have one who has submitted as wrongdoing as she must be associated with the conjugal obligations of another couple. All things considered, she does her work obediently and totally. She is emotionately exhausted by all the work and repentance for her transgression. Halfway through the novel she no longer shows up as a shrouded wonder. Hester presently wears her hair in a top, and the main exertion of significant worth is that which she exhausts in her lessons to Pearl. She has earned the towns individuals regard. Individuals currently view the letter as speaking to the word capable. As the Reverend Dimmesdale alludes to Pearl in his contention for permitting the kid to stay with her mom, God gave Pearl as a gift what's more, as a token of her wrongdoing. The young lady herself is a substantially more impressive discipline to Hester then the letter An is. Pearl is the living image of her transgression. All the malevolence and abhor of this story is exemplified in this pretty much nothing young lady. Hawthorne brings up the issue of how Hester really observes Pearl by alluding to that small, giggling picture of a beast which seems to peep out of Pearl; Regardless of whether it peeped or no, her mom so envisioned it. She is a lovely charming little kid and along these lines a gift, however the pressure of Hester's condition exciting bends in the road the activities of the young lady into abhorrent things. In that regard she is all the more a discipline to Hester then a piece of fabric she should over her dress. On her visit to Governor Bellingham's home to argue for Pearl's authority, Hester passes by a suit of reinforcement in which the bosom plate so amplifies the letter A she wore practically devouring her. In later parts, after a shooting star shows up above Boston, a sexton so thinks about whether it spoken to Holy messenger originating from above. Unexpectedly along these lines, it was a fallen one descending so. Thus the letter A takes on another significance by and by. In Section 13, Hester ponders whether it wouldn't be better if both she and Pearl were both dead. The negligible truth that Hester can ponder self destruction demonstrates that the red letter had not done it's office, in light of the fact that self destruction is a reprehensible sin in the Puritan confidence. This reality in combination with what the red letter was intended to be and was not as well as Pearl herself being a serious discipline in herself, talked about in the above sections obviously underpins my faith in the disappointment of the red letter to accomplish its work.

Strategic importance of the Indian Ocean Region

Vital significance of the Indian Ocean Region The Indian Ocean Region (IOR) has become the center of serious worldwide action throughout the decades for different reasons. The most significant exchange courses of the world go through this district. The Indian Ocean gives the transcendent outlet to oil from the Persian Gulf to different goals everywhere throughout the world. The Malacca Strait is a basic stifle point through which the oil headed for the West bank of USA, China, Japan, Australia and different nations of South-East Asia must pass Oil being of crucial enthusiasm to most countries, significant forces, particularly the USA, keep up a noticeable and tenable nearness in the area. Since reliance on oil will keep on expanding later on and sends out from the Central Asian Republics via ocean would likewise must be directed through the ports of this district, the Indian Ocean is probably going to observe conflicts of financial interests and a fierce security condition. This locale has been named by certain experts, as one o f the most dangerousâ [1]â . The finish of the Cold War has seen a move in the focal point of world regard for the IOR. The obtaining of atomic little weapons by the nations of this area and expansion of fear based oppression, robbery, sedate dealing and inner unrest in a few nations have made the locale very unstable. Outside forces are, in this way, quick to intercede, not exclusively to intervene or decrease this instability yet additionally in their endeavor to stretch out their impact straight up to the IOR through their physical nearness. The persistent monetary concealment of the people groups of this locale has incited nations to frame financial groupings and sub-groupings trying to cultivate more prominent monetary prosperity of the IOR nations. In any case, these endeavors have so far neglected to change into target increases because of numerous reasons; the essential ones being respective issues between countries which sway their direct and reaction in multilateral fora, prohibitive exchange systems f orced by monetarily unrivaled world forces and innovative backwardness of the greater part of the nations, requiring their proceeded with reliance on mechanically predominant countries for foundation and modern turn of events. Islands in IOR. The incomparable Indian edge, the Madagascar edge and St Pauls edge structure the three fundamental chains of islands. The vital ramifications of the islands are as per the following:- These islands are a solitary source economy and don't have any safeguard ability and subsequently stay presented to outer intercession or look for security ensures. These islands have vital noteworthiness because of their area, closeness to exchange courses and all around created harbors. History has borne the way that before, western sea force could control the Indian Ocean and littoral nations by righteousness of having these islands. Significant Straits. The Indian Ocean district has 30 waterways and directs in and bordering the Indian Ocean. The significant ones are as per the following:- Bab-el-Mandeb (between South Yemen and Djibouti); Bass Strait (between Australian mainland and Tasmania); Waterway of Hormuz (among Iran and Oman); Lombok, Bali, Sunda and Makassar Straits (in the Indonesian archipelago) Singapore Strait (among Singapore and Riau island of Indonesia) Malacca Strait (between Malaysia, Indonesia and Singapore) Mozambique channel (among Mozambique and Malagasy Republic.â [2]â Ocean Routes. The Indian Ocean gives significant ocean courses interfacing the Middle East with Europe, East Asia, Africa and US. The accompanying courses are the most noteworthy ones in the Indian Ocean and their conclusion would bring about gagging the worldwide vitality supplies:- Suez Route. Suez course interfaces Mediterranean Sea with the Red Sea through Suez Channel. A significant stifle point in this course is Bab-al-Mandeb which interfaces Red Sea to Arabian Sea. Â Cape Route. This course gives a substitute to the Suez Route and associates the Indian and Atlantic Oceans. Substantial big haulers and mass bearers because of profundity limitations in the Suez Canal additionally ordinarily utilize this course. Waterways of Malacca. This is the most significant section to/from the Pacific Ocean and gives the briefest and most helpful connection among Pacific and Indian Ocean.â Financial Importance to India The Indian landmass extends 1,980 km into the Indian Ocean with half of the Indian Ocean bowl existing in a 1500 km range of India, a reality that has key ramifications. Between the Gulf of Aden and Malacca Strait, is viewed as Indias authoritative reach. India is one of not many (06) nations on the planet to have built up the innovation to separate minerals from the remote ocean bed. Under the law of the ocean, by including the ocean conduits involving regional zone of 20 km, adjoining zone 40 km, an Exclusive Economic Zone (EEZ) of 320 km, India has restrictive rights to investigate mineral riches in a region of 150,000 square km in the Indian Oceanâ [3]â . India imports 70 % of its oil necessities, 4000 big haulers come to Indian ports yearly and just about 95 % of Indian exchange moves via ocean. Any obstruction to our ocean paths, beach front seaward regions and ports, will cripplingly affect the countrys monetary development. Practically 3.5 million Indians work in Gulf nations and it is in Indias enthusiasm to guarantee that the earth in Gulf remains stableâ [4]â . The IO is a basic conduit for worldwide exchange and trade. This vital territory has overwhelming universal oceanic traffic that incorporates half of the universes containerized load, 33% of its mass payload and two third of its oil shipment. Its waters convey overwhelming traffic of oil and oil based goods from the oilfields of the Persian Gulf and Indonesia, and contain an expected 40% of the universes seaward oil creation. Notwithstanding giving valuable minerals and vitality source, the seas fish are critical to the circumscribing nations for residential utilizatio n and fare. Oil. Persian Gulf caters for 61% of oil stores and 26 % of gas stores of the whole world. The Strait of Hormuz is by a long shot the universes most significant oil gag point with an expected 15.5 million barrels of oil move through it every day. The other basic gag point is Malacca Strait and more than 60,000 vessels and 10 million barrels of oil is shipped through itâ [5]â . Notwithstanding US, main part of oil for Japan, South Korea and China goes through the Indian Ocean which makes their anxiety for guaranteeing the free access and a specific level of impact in the district an outright need. Oil request in creating nations is relied upon to develop at a quick rate. By 2020 China is relied upon to be the biggest vitality shopper and its reliance on the import is probably going to be of tune of 80% in 2010. Japan presently imports 95% of its oil from the Middle East. Accordingly, the significance of Gulf as a vitality place in the international strategies of China and Japan is going to proceed later on. An investigation of the patterns in oil utilization has indicated an unmistakable ascent in all nations. Geo-Strategic Imperatives The Indian Ocean gives significant ocean courses interfacing the Middle East, Africa and East Asia with Europe and the Americas. It conveys an especially substantial traffic of oil and oil based goods from the oilfield of the Persian Gulf and Indonesia. Enormous stores of hydrocarbons are being tapped in the seaward territories of Saudi Arabia. Iran, India and Western Australia. An expected 40% of the universes seaward oil creation originates from the Indian Ocean. Sea shore sands, plentiful in substantial minerals, and seaward stores are effectively abused by circumscribing nations, especially India, South Africa, Indonesia, Sri Lanka and Thailand. Today, about 20 million delivery compartments are moving the world over earned by less than 4000 structures. The blast of trans-maritime exchange has made business progressively powerless, not just in the conspicuous sense that economies have developed increasingly associated, yet additionally in light of the fact that, even as the volume of dispatched loads expanded, the quantity of huge freight bearers has decreased in light of the expanding size of business vessels, from supertankers to holder ships. The Straits of Malacca, the universes second busiest ocean path, accept pertinence here. 80% of Japans oil supplies and 60% of Chinas oil supplies are transported through the Straits of Malacca. US$ 70 billion worth of oil goes through the waterways every year. Practically a large portion of the universes containerized traffic goes through this gag point. The greater part of the boats approach the waterways through the 10 degree channel between the Andaman and Nicobar islands. India, along these lines, can possibly command a vital ocean path. India has built up its first tri-administration order, the A Command at Port Blair in the Andamans. It intends to create Port Blair as a vital universal exchange place and construct an oil terminal and transshipment port in Campbell Bay in the Nicobar islands. India is an individual from the Antarctic Treaty Parties Consultative Group and has just set up two for all time staffed logical bases there. It has built a 10,000 foot runway in Antarctica to support future missions, having finished a few fruitful arrivals there. The Laccadive islands, in like manner, offer the chance of India anticipating its capacity westwards. India is only 800 km away from OS military offices in Oman. Exchange with the Gulf States is a significant feature of the Indian economy from antiquated occasions. With expanding exchange relations with the nations of the East, India has higher stakes in the locale, in the years to come, Trade volumes with the ASEAN nations have dramatically increased in 10 years, from a minor $1484 million of every 1993, the Indian market has developed as probably the biggest merchant of South East Asian products with imports contacting $10,942 million in 2004â [6]â . The as of late closed Free Trade Agreements with nations like Thailand and Singapore are set to add to this pattern. Growing markets and bigger impa

Customer Service Essay

You are given to respond to the accompanying inquiries either orally or composed as concurred with your speaker. If it's not too much trouble compose your answers obviously. On the off chance that you don't see any of the inquiries please pose to your instructor for characterized clarification Why is it important to unmistakably distinguish, before planning item and administration contributions, client needs, and what are a portion of the more subtle help perspectives that may educate buying choices? What are simply the inquiries that all clients pose (intentionally or subliminally) before they focus on a buy and how is the introduced item/administration pack prone to influence a customer’s buying choice? Having the option to give great client care isn't an inborn ability. It necessitates that workers get suitable preparing and figure out how to comprehend their job/s with respect to client support. This applies to those representatives who are in direct contact with clients and the individuals who have no immediate contact with clients. Workers who have great client support aptitudes will for the most part experience less grievances. Depict the manners by which representatives can become familiar with the aptitudes expected to give great client assistance. In any association there are both inner and outside clients. Theseâ are all piece of the customerâ€supplier chain. For the client/end-client to get quality items/administrations it is vital that all parts of the customerâ€supply chain meet explicit quality targets. Who really sets these quality principles and how are they set? In what manner can an association support suppliersâ€both interior and externalâ€to take an interest in effectively guaranteeing quality principles are kept up with the goal that less client grievances are likely? How might you gather client criticism about client assistance levels, their fulfillment with items and administrations and any objections they may have? Distinguish and clarify the phases that ought to be followed when managing a client grievance. Recognize and clarify the means in the critical thinking process.

Book Riots Deals of the Day for February 4, 2020

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Foreign exchange risk in banks - Free Essay Example

Objective of the Project:- The objective of this project is to understand the various types of foreign exchange risks. And the potential impact of the foreign exchange risks on the institutions involved in foreign exchange trading. Background:- In this project, I have calculated the value of risk involved in foreign exchange transactions at United Bank of India. Methodology:- The data used in this project is obtained from secondary research. Historical method is used to calculate the Value at Risk (VaR). The Value at Risk is thus calculated is used to find the actual amount at risk in terms of INR. Findings and Conclusion:- By finding the total risk, we get to know the total amount that the organization can lose in the worst possible scenario. It happens if the allocation of fund is not based upon the possible value at risks. In carrying out this project, I have found that the bank has allocated more funds for its forex operations than required. Recommendations:- At present the bank is operating at the 99% confidence level to calculate the value at risk. As they are working at 99% confidence level, due to this they need to employ more capital for their forex operations. United Bank of India should operate at 95% confidence level. This will help them cut down funds employed for their forex operations. Introduction to Foreign Exchange The creator of the universe has not distributed resources needed by the civilised world evenly on our planet earth. What is available easily at one place is hardly available at another place. This has resulted in an environment of interdependency among the countries. The interdependency among countries has given rise to international trade. The growth of international trade of goods and services has necessitated a method of exchange. Let us evaluate a transaction involving supply of goods from India to United Kingdom. The value of goods is known to the Indian supplier in INR. Thus the Indian supplier will price the goods so that he can make profit in INR. At the same time the purchasing power available with the UK customer is in GBP (Great Britain Pound). Therefore the customer will want to know the price in GBP. Now, if buyer and seller decide to settle the transaction in USD. Therefore to complete such transactions, the parties to the transaction need to know the value of one currency in terms of another. This mechanism of converting one currency in terms of another is known as â€Å"Foreign Exchange†. Foreign Exchange is defined in Foreign Exchange management Act 1999 as:- Ø All deposits, credits, balances payable in any foreign currency and any drafts, travellers cheque, letter of credit and bill of exchange expressed or drawn in Indian currency and payable in foreign currency. Ø Any instrument payable at the option of the drawee or holder thereof or any other party thereto, either in Indian currency or in foreign currency or partly in one and partly in the other. In short, Foreign Exchange is the method of conversion of one currency into another. As foreign currency is treated as a commodity, it is traded in a market. Trade constitutes a small portion of the â€Å"Foreign Exchange Market†. The cross border movement of capital forms the major portion. Major participants of Foreign Exchange Market include commercial banks, central banking institutions, investment banks, foreign exchange brokers and merchants. The commercial banks become the vehicles for conversion, as most of the foreign exchange operation takes place through the account maintained with these banks. Objective of the Project A Project Report on FOREIGN EXCHANGE risks in Bank. Foreign Exchange is a very large financial market. At times foreign exchange market becomes very volatile. This is responsible for the various risks in foreign exchange market. Everyone involved in the foreign exchange trading should we aware of foreign exchange risk. To ascertain Foreign Exchange risk in Bank we need to execute the following tasks:- Various types of foreign exchange services available at Banks. The various types of foreign exchange risks. The various foreign currencies which has significant demand. The possible Hedging strategies that can be deployed to manage foreign exchange risks. Determination of Value at Risk (Var). Research Methodology Data / Information Collection. Study of data collected to calculate the value at risk (VAR). Calculation of mean return. Calculation of Standard Deviation. Data/Information Collection Data and information is collected from the various sources. These sources include data from the Bank, magazines, journals, books and newspapers. The information thus collected is used to calculate the Value at Risk. Value at risk (VaR) Risk is about odds of losing money and VaR is based on that common sense fact. Here risk is the odds of really big loss. Big loss is different for every investor depending on the investors appetite. But every investor whether big or small does wants to know his/her losses in the worst case. VAR answers the question, What is my worst-case scenario? To calculate VaR we need three components. These three components are: a time period, a confidence level and a loss amount or loss percentage. Using VaR investor will get to know things like: What is the most I can expect to lose with 95% confidence over a period of 10 days? What is the maximum percentage I can expect to lose with 95% confidence over a period of 10 days? We consider a relatively high level of confidence, mostly 95% or 99% confidence level. Time period taken can be anything like a day, 10 day, a month or a year depending upon what investor is looking for. A one day VAR of $10mm using a probability of 5% means that there is a 5% chance that the portfolio could lose more than $10mm in the next trading day. There are three methods of calculating VaR: the Historical method, the parametric method also known as variance-covariance method and the Monte Carlo simulation. The Historical Method: The historical method simply re-organizes actual historical returns, putting them in order from worst to best. It then assumes that history will repeat itself, from a risk perspective. We then put these data in the histogram that compare the frequency of return. Tiny bars in histogram represent the less frequent daily return while the highest point in histogram represents the most frequent daily return. Parametric Method:This method ass umes that the stock returns are normally distributed. In this method we estimate only two factors an expected return and a standard deviation. These two factors allow us to plot a normal distribution curve. Monte Carlo Simulation: The third method involves developing a model for future stock price returns and running multiple hypothetical trials through the model. A Monte Carlo simulation refers to any method that randomly generates trials, but by itself does not tell us anything about the underlying methodology. Every run of Monte Carlo Simulation gives different result. But differences between these results are likely to be very narrow. Calculation of Value at Risk (VaR) To calculate the value at risk, at first we need to collect the historical data. Historical data is the historical exchange rate of a particular foreign currency against INR. The foreign currencies which we are considering here are United States Dollar (USD), Great Britain Pound (GBP), Euro and Japanese Yen (JPY). We are considering these currencies because they are the major currencies as exchange is easily available for these currencies. We will calculate the value at risk the investor faces in case he/she invests in any of these currencies. At first we will consider the case in which an investor is investing in United States Dollar. The investor will buy United States Dollar in exchange of INR. USD/INR The historical exchange rate for USD/INR for a period of 22 days starting from 15th April 2011 to 6th May 2011 is as follows: Date Close Periodic Return 06-05-2011 44.785 0.53% 05-05-2011 44.5499 0.08% 04-05-2011 44.515 0.34% 03-05-2011 44.3655 0.09% 02-05-2011 44.325 0.17% 01-05-2011 44.25 0.00% 30-04-2011 44.25 -0.24% 29-04-2011 44.3549 0.00% 28-04-2011 44.3549 -0.16% 27-04-2011 44.425 -0.34% 26-04-2011 44.5774 0.25% 25-04-2011 44.465 0.16% 24-04-2011 44.395 0.00% 23-04-2011 44.395 0.18% 22-04-2011 44.315 -0.05% 21-04-2011 44.335 -0.09% 20-04-2011 44.375 -0.48% 19-04-2011 44.59 0.55% 18-04-2011 44.345 0.01% 17-04-2011 44.34 0.00% 16-04-2011 44.34 -0.35% 15-04-2011 44.495 From the everyday exchange rate the periodic return is found by using the formula given below: Natural Logarithm (Present date exchange rate/ previous date exchange rate) The Value at Risk from the above data is calculated by using the given formula in excel: PERCENTILE (array of the periodic return,5%) Here the array of the periodic return is the everyday return of the period for which historical data is taken. The second attributes i.e., 5% tells that 95 times out of 100 the loss will not exceed the calculated VaR. Therefore we can say with 95% confidence that the loss will not exceed the Value at Risk (VaR) thus calculated. From the above data the Value at Risk (VaR) calculated at 95% confidence level is: 0.35% From the above data the Value at Risk (VaR) calculated at 99% confidence level is: 0.46% Euro/INR The historical exchange rate for Euro/USD for a period of 22 days starting from 15th April 2011 to 6th May 2011 is as follows: Euro/USD Euro/INR Date Close Date Close Periodic Return 06-05-2011 1.4501 06-05-2011 64.94273 -1.61% 05-05-2011 1.4814 05-05-2011 65.99622 -0.38% 04-05-2011 1.4882 04-05-2011 66.24722 1.02% 03-05-2011 1.478 03-05-2011 65.57221 -0.29% 02-05-2011 1.4837 02-05-2011 65.765 0.01% 01-05-2011 1.486 01-05-2011 65.7555 0.00% 30-04-2011 1.486 30-04-2011 65.7555 -0.24% 29-04-2011 1.486 29-04-2011 65.91138 0.45% 28-04-2011 1.4794 28-04-2011 65.61864 0.70% 27-04-2011 1.4668 27-04-2011 65.16259 0.01% 26-04-2011 1.4617 26-04-2011 65.15879 0.48% 25-04-2011 1.4584 25-04-2011 64.84776 0.16% 24-04-2011 1.4584 24-04-2011 64.74567 0.00% 23-04-2011 1.4584 23-04-2011 64.74567 0.18% 22-04-2011 1.4584 22-04-2011 64.629 -0.05% 21-04-2011 1.4584 21-04-2011 64.65816 0.38% 20-04-2011 1.4515 20-04-2011 64.41031 0.99% 19-04-2011 1.4302 19-04-2011 63.77262 0.74% 18-04-2011 1.4275 18-04-2011 63.30249 -1.21% 17-04-2011 1.445 17-04-2011 64.0713 0.00% 16-04-2011 1.445 16-04-2011 64.0713 -0.35% 15-04-2011 1.445 15-04-2011 64.29528 Historical exchange rate for Euro/INR is determined from the historical exchange rate of Euro/USD and USD/INR. Exchange rate of Euro/INR = Exchange rate of Euro/USD * Exchange rate of USD/INR In this case again the periodic return is found by using the formula given below: Natural Logarithm (Present date exchange rate/ previous date exchange rate) The Value at Risk from the above data is calculated by using the given formula in excel: PERCENTILE (array of the periodic return, 5%) Here the array of the periodic return is the everyday return of the period for which historical data is taken. The second attributes i.e., 5% tells that 95 times out of 100 the loss will not exceed the calculated VaR. Therefore we can say with 95% confidence that the loss will not exceed the Value at Risk (VaR) thus calculated. From the above data the Value at Risk (VaR) calculated at 95% confidence level is: 1.21%. From the above data the Value at Risk (VaR) calculated at 99% con fidence level is: 1.53%. GBP/INR The historical exchange rate for GBP/USD for a period of 22 days starting from 15th April 2011 to 6th May 2011 is as follows: GBP/USD GBP/INR Date Close Date Close Periodic Return 06-05-2011 1.64057 06-05-2011 73.47293 0.05% 05-05-2011 1.64847 05-05-2011 73.43917 -0.24% 04-05-2011 1.65374 04-05-2011 73.61624 0.70% 03-05-2011 1.64781 03-05-2011 73.10591 -1.16% 02-05-2011 1.66858 02-05-2011 73.95981 0.30% 01-05-2011 1.66648 01-05-2011 73.74174 0.00% 30-04-2011 1.66648 30-04-2011 73.74174 -0.24% 29-04-2011 1.66648 29-04-2011 73.91655 0.12% 28-04-2011 1.66449 28-04-2011 73.82829 0.43% 27-04-2011 1.65478 27-04-2011 73.5136 0.09% 26-04-2011 1.64764 26-04-2011 73.44751 -0.18% 25-04-2011 1.65483 25-04-2011 73.58202 0.16% 24-04-2011 1.65483 24-04-2011 73.46618 0.00% 23-04-2011 1.65483 23-04-2011 73.46618 0.18% 22-04-2011 1.65483 22-04-2011 73.33379 -0.05% 21-04-2011 1.65483 21-04-2011 73.36689 0.99% 20-04-2011 1.63697 20-04-2011 72.64054 0.01% 19-04-2011 1.62893 19-04-2011 72.63399 0.68% 18-04-2011 1.62678 18-04-2011 72.13956 -0.49% 17-04-2011 1.63499 17-04-2011 72.49546 0.00% 16-04-2011 1.63499 16-04-2011 72.49546 -0.35% 15-04-2011 1.63499 15-04-2011 72.74888 Historical exchange rate for GBP/INR is determined from the historical exchange rate of GBP/USD and USD/INR. Exchange rate of GBP/INR = Exchange rate of GBP/USD * Exchange rate of USD/INR In this case again the periodic return is found by using the formula given below: Natural Logarithm (Present date exchange rate/ previous date exchange rate) The Value at Risk from the above data is calculated by using the given formula in excel: PERCENTILE (array of the periodic return, 5%) Here the array of the periodic return is the everyday return of the period for which historical data is taken. The second attributes i.e., 5% tells that 95 times out of 100 the loss will not exceed the calculated VaR. Therefore we can say with 95% confidence that the loss will not exceed the Value at Risk (VaR) thus calculated. From the above data the Value at Risk (VaR) calculated at 95% confidence level is: 0.49% From the above data the Value at Risk (VaR) calculated at 99% confiden ce level is: 1.03% JYP/INR The historical exchange rate for USD/JYP for a period of 22 days starting from 15th April 2011 to 6th May 2011 is as follows: USD/JYP JPY/USD Date Close Close 06-05-2011 80.3393 0.01244721 05-05-2011 79.7894 0.01253299 04-05-2011 81.0509 0.01233793 03-05-2011 80.7578 0.0123827 02-05-2011 81.4518 0.0122772 01-05-2011 81.2046 0.01231457 30-04-2011 81.2046 0.01231457 29-04-2011 81.2046 0.01231457 28-04-2011 81.7696 0.01222948 27-04-2011 82.2607 0.01215647 26-04-2011 81.7062 0.01223897 25-04-2011 81.9528 0.01220215 24-04-2011 81.9528 0.01220215 23-04-2011 81.9528 0.01220215 22-04-2011 81.9528 0.01220215 21-04-2011 81.9528 0.01220215 20-04-2011 82.7627 0.01208274 19-04-2011 82.6668 0.01209675 18-04-2011 82.8371 0.01207189 17-04-2011 83.301 0.01200466 16-04-2011 83.301 0.01200466 15-04-2011 83.301 0.01200466 Historical exchange rate for JPY/USD is determined from the historical exchange rate of USD/JPY. Exchange rate of JPY/USD = 1/ (Exchange rate of USD/JPY) JPY/INR Date Close Periodic Return 06-05-2011 0.557448 -0.16% 05-05-2011 0.558344 1.65% 04-05-2011 0.549223 -0.03% 03-05-2011 0.549365 0.95% 02-05-2011 0.544187 -0.13% 01-05-2011 0.54492 0.00% 30-04-2011 0.54492 -0.24% 29-04-2011 0.546212 0.69% 28-04-2011 0.542438 0.44% 27-04-2011 0.540051 -1.02% 26-04-2011 0.545582 0.55% 25-04-2011 0.542568 0.16% 24-04-2011 0.541714 0.00% 23-04-2011 0.541714 0.18% 22-04-2011 0.540738 -0.05% 21-04-2011 0.540982 0.89% 20-04-2011 0.536171 -0.60% 19-04-2011 0.539394 0.76% 18-04-2011 0.535328 0.57% 17-04-2011 0.532287 0.00% 16-04-2011 0.532287 -0.35% 15-04-2011 0.534147 Historical exchange rate for JPY/INR is determined from the historical exchange rate of JPY/USD and USD/INR. Exchange rate of JPY/INR = Exchange rate of JPY/USD * Exchange rate of USD/INR In this case again the periodic return is found by using the formula given below: Natural Logarithm (Present date exchange rate/ previous date exchange rate) The Value at Risk from the above data is calculated by using the given formula in excel: PERCENTILE (array of the periodic return, 5%) Here the array of the periodic return is the everyday return of the period for which historical data is taken. The second attributes i.e., 5% tells that 95 times out of 100 the loss will not exceed the calculated VaR. Therefore we can say with 95% confidence that the loss will not exceed the Value at Risk (VaR) thus calculated. From the above data the Value at Risk (VaR) calculated at 95% confidence level is: 0.60% From the above data the Value at Risk (VaR) calculated at 99% confiden ce level is: 0.93% Calculation of Standard Deviation Standard deviation is a measure of how far apart the data are from the average of the data. If all the observations are close to their average then the standard deviation will be small. In finance, standard deviation is applied to the annual rate of return of an investment to measure the investments volatility. Standard deviation is also known as historical volatility and is used by investors as a gauge for the amount of expected volatility. Suppose that an investor has INR 45,000 to invest and is considering buying the USD. Currently one USD is valued at INR 45. The investor assesses a 0.75 probability that the USD will appreciate against INR over a coming period, so that one USD will be equivalent to INR 46 and a 0.25 probability that the USD will depreciate against INR to become equal to INR 44. INR 45,000 (at one USD equal to INR 45) = 45,000/45 = USD 1000 The payoffs from the proposed investment are as follows:- If the USD appreciates (One USD becomes equal to I NR 46): USD 1000 *46 = INR 46,000 If the USD depreciates (One USD becomes equal to INR 44): USD 1000*44 = INR 44,000 PAYOFF (INR) RATE OF RETURN PROBABILITY EXPECTED RATE OF RETURN VARIANCE (1) (2) (3) (4) = (2) x (3) (5) 46,000 (46 45)/45 = 0.022 0.75 0.0165 (0.022 0.011)^2 x 0.75 = 0.00009075 44,000 (44 45)/ 45 = -0.022 0.25 -0.0055 (-0.022 0.011)^2 x 0.25 = 0.00027225 sum (x) 0.011 Add the above two results to get ? ² = 0.000363 The standard deviation is the square root of the variance. In the above example, the standard deviation is square root of 0.000363 i.e. 0.01905 or 1.905%. Mean Return The average expected return of a given investment, when all possible outcomes are considered. To calculate mean return, estimate the probability of each possible return, and then take a weighted average of those returns. To calculate mean return, at first we need to calculate all the possible rate of return of the investment with their respective probability. Lets say we invest Rs100, which is called our capital. One year later, if we expect our investment to yield Rs110 with 40% probability and Rs 112 with 60 % probability. What is the rate of return of our investment in the two cases and also what is our mean return? We calculate rate of return by using the following formula: ((Return Capital) / Capital) Ãâ€" 100% = Rate of Return For the return of Rs110, the rate of return is ((Rs110 Rs100) / Rs100) Ãâ€" 100% = 10% Therefore, our rate of return is10%. For the return of Rs112, the rate of return is ((Rs112 Rs100) / Rs100) Ãâ€" 100% = 12% Therefore , our rate of return is12%. Mean return of investment: To find the mean return, we take the probability of each possible return outcome and multiply it by the return outcome itself. The value so found in each case is added to get the mean return of investment. 10*(40/100) + 12*(60/100) = 4 + 7.2 = 11.2 Therefore the mean return of our investment is 11.2%. Forex Markets Introduction FOREX, an acronym for Foreign Exchange, is the largest financial market in the world. With an estimated $1.5 trillion in currencies traded daily, Forex provides income to millions of traders and large banks worldwide. The market is so large in volume that it would take the New York Stock Exchange, with a daily average of under $20 billion, almost three months to reach the amount traded in one day on the Foreign Exchange Market. The foreign exchange market is the mechanism by which currencies are valued relative to one another, and exchanged. An individual or institution buys one currency sells the other in a simultaneous transaction. Currency trading is always done in pairs, where one currency is sold for another and is represented as EUR/USD or USD/INR. The exchange rate is determined through the interaction of market forces dealing with supply and demand. Foreign Exchange Traders generates profit or loss by speculating whether a currency will rise or fall in value in compar ison to another currency. A trader would buy the currency which is anticipated to gain in value, or sell currency which is anticipated to lose value against another currency. The value of a currency reflects condition of a countrys economy with respect to other major economies. The Forex market does not rely on any one particular economy. In forex market a trader can earn money by either buying or selling the currency. Forex trading can be identified under two categories, reactive trading and speculative trading. Reactive trading is the buying or selling of currencies in response to economic or political events, while speculative trading is based on trader anticipating events. Types of Forex Markets In Forex trading, there are two markets that we can trade money in: major and minor markets. Major markets are the major countries currencies, and include currencies such as US Dollars and Euros. Minor markets can be distinguished as second world countries currencies, and include currencies such as the Korean Won and New Taiwan Dollar. When we are trading Forex, it is important to know which market you should trade in, and the significant differences between the two. The reason there are two different markets is to prevent investors from taking advantage of trading major established currencies against developing countries currencies, which are often very volatile. For example, if a person has prior knowledge that a third world country was about to experience a war or their government was about to be overthrown, you could take advantage of this by trading that countries currency against the US Dollar, then trading back after the crisis sent the other currency plummeting. The m ajority of Forex trading is done in the Major market, because it is so much more stable than the Minor market. For example, the US Dollar is considered the most stable currency in existence, and the fact that it survived multiple wars and crisiss proves that it is able to stand the test of time. If a new investor was looking for a relatively safe investment, he/she could trade US Dollars against Euros, and be very confident that at the worst, he/she will experience a small loss because both currencies are very stable. However, for those traders who decide to invest in the Minor market, they need to be very careful. The spreads in the Minor market are very big, so it takes a significant swing in currency value to make a profit on a Minor market trade. Also, since some Minor currencies can quickly lose all of their value (think a war or invasion), one can lose a vast amount of money basically overnight. Major currencies in Foreign Exchange The four currencies which have been identified as major currencies: United States Dollar (USD) Great Britain Pound (GBP) Euro Japanese Yen (JPY) These currencies are called major currencies because exchanges for these currencies are easily available everywhere around the globe. Apart from these major currencies there are exotic currencies. Exotic currencies are thinly traded currencies. They are illiquid, lack market depthand trade at low volumes. Trading an exotic currency can be expensive, as the bid-ask spread is usually large. Exotics are not considered major currencies because they are noteasily traded in a standard brokerage account. Examples of exotic currencies include the Thai baht, Uruguay peso or Iraqi dinar. Forex Markets in India Indias share in world forex market has shown growth of 0.9% last year and will grow further. It is the fastest growth of any country. The growth rates of developed countries is much lower compared with developing countries.UK and US have shown the lowest change in contribution of foreign exchange. In India people are now more aware of the kinds of trading like derivative markets, options, swapping, hedging etc. The most important characteristic of forex is the impact on various currencies by the change in one currency rates. Any economic activity in world affects the forex market immediately. The overall approach to the management of Indias foreign exchange reserves takes into account the changing composition of the balance of payments and endeavours to reflect the ‘liquidity risks associated with different types of flows and other requirements. Foreign Exchange Rates Foreignexchange rateis the rate at which one currencycan be exchanged for another. In other words, it is the value of another countrys currency compared to that of our own. If we are travelling to another country, you need to buy the local currency. Just like the price of any asset, the exchange rate is the price at which you can buy that currency. Suppose we are travelling to Egypt, and the exchange rate forINR to Egyptian poundsis 7.5:1, this means that to buy every Egyptian pounds we need to spend INR 7.5. Types of Foreign Exchange Rates The various types of foreign exchange rates are: Floating Rates Fixed Rates Pegged Rates Floating Rates: When the value of the currencies fluctuates freely due to market forces, these frequent changes in the values of currencies are termed as floating rates. Floating rates are preferred by a country if there are reasons to believe that the country can cope up with the constant change in the value of its currency. There are a number of reasons for the fluctuation in the value of a currency. The most common reason is that of demand and supply. If there is a trade deficit than it will cause less demand for the currency, as a result the value of currency will go down. In case of trade surplus than it will cause more demand for the currency, as a result the value of currency will rise. Fixed Rates: Fixed rates are generally used by smaller economies. Smaller economies uses fixed exchange rate because it is difficult for them to keep pace with the frequently changing exchange rate. Fixed exchange rate secures the foreign investor from any loss due to exchange rate fluctua tion. Fixed exchange rates do have their disadvantages on the economic front. Due to fixed exchange rate the monetary policies of the country becomes ineffective. Pegged Rates: It is a compromise between fixed rates and floating rates. In pegged rate the currency fluctuate within a fixed band around central value. It is better for developing economy in comparison with the other two exchange rates as it allows certain degree of market adjustment as well as stability. Exchange rate depending upon type of transaction Exchange rate also depends upon the type of transaction. Here the type of transactions are sale transaction and purchase transaction. Authorised Dealer does quote different rates for sales and purchase of foreign currency. Purchase of foreign currency is called inward remittance of foreign currency. Similarly, sale of foreign currency is called outward remittance of foreign currency. Settlement of Foreign Exchange Transaction There are two aspects in a transaction involving sales or purchase of foreign currency, 1. Rate of conversion. 2. The date of delivery i.e., the date on which the transaction is to be completed. The delivery under a foreign exchange transaction can be settled in one of the following ways:- Ø Ready or Cash: The transaction is to be settled on the same day. Ø TOM : The delivery of the foreign exchange/currency is to be made on the next working day. Ø SPOT : The delivery of the foreign exchange/currency is to be made on the second working day. Ø Forward : The delivery of foreign exchange will take place on third working day or any future date from the third working date. Factors influencing Foreign Exchange Rates An exchange rate is determined by supply and demand factors. These are the various factors which determine the demand and supply of a currency. 1. Inflation If inflation in the India is lower than elsewhere, then Indian exports will become more competitive and there will be an increase in demand for INR. Also foreign goods will be less competitive and so Indian citizens will supply less INR to buy foreign goods. Therefore the rate of INR will tend to increase. 2. Interest Rates If interest rates in India rise relative to elsewhere, it will become more attractive to deposit money in the India. Therefore demand for INR will rise. This is known as â€Å"hot money flows† and is an important short run determinant of the value of a currency. 3. Speculation If speculators believe the INR will rise in the future, they will demand more now to be able to make a profit. This increase in demand will cause the value of INR to rise. Therefore movements in the exchange rate do not always reflect economic fundamentals, but are often driven by the sentiments of the financial markets. For example, if markets see news which makes an interest rate increase more likely, the value of the INR will probably rise in anticipation. 4. Change in competitiveness If Indian goods become more attractive and competitive, this will cause the value of the Exchange Rate to rise. This is important for determining the long run value of the INR. 5. Relative strength of other currencies INR will rise if there is depreciation in the values of other currencies. For example, if USD depreciates then this will result in the relative appreciation in the value of INR. 6. Balance of Payments A large deficit on the current account means that the value of imports is greater than the value of exports. If this is financed by a surplus on the financial / capital account then this is okay. But a country who struggles to attract enough capital inflows will see depreciation in the currency. Foreign Exchange Risk and Hedging There is a spectrum of opinions regarding various foreign exchange risks and methods to hedge them. Some firms feel hedging techniques are speculative or do not fall in their area of expertise and hence do not venture into hedging practices. Other firms are unaware of being exposed to foreign exchange risks. There are a set of firms who only hedge some of their risks, while others are aware of the various risks they face, but are unaware of the methods to guard the firm against the risk. There is yet another set of companies who believe shareholder value cannot be increased by hedging the firms foreign exchange risks as shareholders can themselves individually hedge themselves against the same using instruments like forward contracts available in the market or diversify such risks out by manipulating their portfolio. Different categories of risk The various risks associated with foreign exchange are: Interest Rate Risk Exchange Rate Fluctuation Risk Counter-party Risk Political Risk Translation Risk Interest Rate Risk: Interest rate riskrefers to the profit and loss generated by fluctuations in the forward spreads. Along with fluctuations in forward spread, forward amount mismatches and maturity gaps among transactions in the foreign exchange book also plays a significant role towards the interest rate risk. The forward amount mismatch is the difference between the spot and the forward amounts. Exchange Rate Fluctuation Risk: Exchange rate fluctuation risk refers to the risks to which investors are exposed because of the change in exchange rate of that foreign currency against INR. If the value of the foreign currency goes down with respect to INR then investors are bound to lose. In case foreign currency appreciates against INR then the investor will gain more. Counter-party risk: Counter-party risk refers to the risk of each party of the contract that the counterparty will not leave up to his contractual obligations. Counterparty risk is also referred to as â€Å"Defa ult Risk†. Political Risk: Political Risk refers to the reaction of the foreign exchange market due to the change in the business environment of a country. However, the reaction of the foreign exchange market is more dramatic for unfavourable events than for favourable events. Translation Risk: Translation risk is encountered when there is a need to translate foreign currency assets or liabilities into the home currency for accounting purpose in a given period. Hedging of Forex Risk Hedging refers to managing risk to an extent that makes it bearable. In international trade and dealings, foreign exchange plays an important role. Fluctuations in the foreign exchange rate can have significant impact on business decisions and outcomes. Hedging is the process by which the party involved in foreign exchange transaction can protect the price of financial instrument at a date in the future. It is done by taking an opposite position in the present. The opposite direction in the present is taken by using derivatives like currency options, currency futures, forward contracts, swap, money market etc. Hedging involves: Foreign Exchange exposure identification Value of exposure Creation of offsetting positions through derivatives Measurement of Hedge ratio Degree of risk acceptable to management Expectations regarding future movement of exchange rates Foreign Exchange exposure identification: Foreign exchange exposures arise from many different activities. A traveller going to visit another country has the risk that if that countrys currency appreciates against their own their trip will be more expensive. An exporter who sells its product in foreign currency has the risk that if the value of that foreign currency falls then the revenues in the exporters home currency will be lower. An importer who buys goods priced in foreign currency has the risk that the foreign currency will appreciate thereby making the local currency cost greater than expected. Fund Managers and companies who own foreign assets are exposed to falls in the currencies where they own the assets. This is because if they were to sell (repatriate) those assets their exchange rate would have a negative effect on the home currency value. Other foreign exchange exposures are less obvious and relate to the exporting and importing in ones local currency but where the negotiated price is being affected by exchange rate movements. Value of Exposure: There is a risk that the companys equities, assets, liabilitiesor incomewill change in value as a result of exchange rate changes. Therefore the value of exposure in foreign exchange is the possible financial loss due to the foreign exchange operations. Creation of offsetting positions through derivatives: Offset position is created by liquidating a futures position. This is done by entering an equivalent, but opposite, transaction using derivatives. It eliminates the delivery obligation. Hence reduces an investors net position in an investment to zero, so that no further gains or losses will be experienced from that position. Measurement of Hedge ratio: The Hedge ratio is the ratio comparing thevalue of a positionprotected via a hedge with the size of the entire position itself. Suppose a person is holding$10,000 inforeign equity, which exposes him to currency risk. Ifhe hedges $5,000 worth o f the equity with acurrency position,then his hedge ratio is 0.5 (50 / 100). This means that50% of his equity position is sheltered from exchange rate risk. Degree of risk acceptable to management: Degree of risk acceptable It is very important for an organization to know the degree or amount of risk that they can bear in foreign exchange transactions. In a transaction if the risk is more than what the organization sees as acceptable risk, then the organization needs to hedge the risk such that it comes under the acceptable category. Expectations regarding future movement of exchange rates: Future movement of exchange rate depends upon a number of factors. An analysis of all these factors and their impact on foreign exchange rate gives us the fair idea of what to expect from the movement of exchange rate in future. Depending upon the expectations the risk is determined. Forex Operation at UBI The various Foreign Exchange Operations at United Bank of India are: Foreign Exchange Operations Correspondent Banking International Treasury NRI Services Remittance Facility for Resident Indians Foreign Exchange Operations: Through its large network of authorized branches, the Bank caters to the foreign exchange needs of its clientele engaged in export and import trade. The dealing room at H.O. provides rates for conversion of all major world currencies like U S Dollar, Sterling Pounds, Euro, Swiss Francs, Japanese Yen and other exotic currencies. The services to the customers of the Bank include hedging of foreign currency risks. The bank grants pre-shipment credit in foreign currency and Rupee to exporter customers. It is also involved in Purchasing/Discounting/Negotiating of export bills. Correspondent Banking: Correspondent banking is the service provided by the bank or other financial institution on behalf of another, equal or unequal, financial institutions. A correspondent bankcan conduct business transactions, accept deposits and gather documents on behalf of the other financial institution. Correspondent banks are more likely to be used to conduct business in f oreign countries, and act as a domestic banks agent abroad. United Bank of India has correspondent banking relationship with more than 400 International banks around the globe. The correspondent banks are selected with great care to ensure that the customers get the best and most reliable service in the foreign lands at most competitive rates. International Treasury: United Bank of Indiahas a strong presence in the Treasury Market in India. The Foreign Exchange treasury at Head office is equipped with state of art technology, highly experienced and skilled professionals. The Bank deal in all the major international currencies i.e. US$, GBP, Euro, Yen as well as other currencies. The treasury undertakes the following treasury related activities: Foreign Exchange Inter Bank Placements / Borrowings Sale Purchase of currency on behalf of customers Forward Cover Bookings Cross Currency Swaps Interest Rate Swaps (IRS) Foreign Exchange Money Market Operations NRI Services: The various services available for NRI at United Bank of India are Opening of account and source of credit Remittance Facilities from India Remittance Facility to India by NRI Loans against deposits to NRI Housing loan for NRI Remittance Facility for Resident Indians: The remittance facility for resident Indians are provided on the following ground Business trip Medical Treatment Study Abroad Private Visits Employment Abroad Emigration Gifts and Donations International Credit Card International Debit Card Endorsement on Passport SWIFT Codes SWIFT stands for â€Å"Societyfor WorldwideInterbankFinancial Telecommunicationcode†. It is an internationally-recognized identification code forbanksaroundtheworld. SWIFT codes are most commonly used for international wire transfers.SWIFT code comprises of 8 or 11alphanumeric characters. TheInternational Organizationof Standardization(IOS) was the authoritative body that approved the creation of SWIFT codes. SWIFT code enables bank around the world to be identified without the need to specify an address or bank number. SWIFT codes are used mainly for automatic payment transactions. A SWIFT code consists of four parts. These four parts identifies the different attributes to uniquely identify any branch of a bank. The first part in a SWIFT code gives the bank code, second part represents the country code, third part gives is location code and the fourth part is branch code. This way SWIFT code helps in uniquely identifying any branch of a bank. Foreign Exchange SW APs Foreign Exchange SWAPs is a Foreign Exchange agreement between two parties to exchange a set amount of one currency for another and, after a certain specified period of time, to give back the original amounts swapped. In the FOREX market, most inter-bank trading of forwards is done through the trade of FOREX swaps. A FOREX swap is simply two transactions entered into simultaneously; an agreement is made to exchange currencies now at the prevailing spot rate and also to exchange the currencies back in the future at the prevailing forward rate. For example, when a swap trader enters a swap he/she may agree to give INR and receive USD now (with amounts determined by the current spot) and also agree to give USD and get INR in one year (amounts determined by the prevailing one year forward rate). Therefore, the FOREX swap is just a spot trade and a forward trade rolled into one. Dealing Room A dealing room is a place where there are a large number of traders. Each trader has a desk with number of computers. Each of the traders is trading, that is buying or selling, usually one foreign-exchange bilateral pair. That is they are buying or selling pounds for dollars, or dollars for euros, or euros for yen, or dollars for yen. All the major currencies would be covered by the traders in the trading room, involving all the spot exchange rate and the forward and future exchange rates for the major currencies. In some cases there will be traders who deal with a number of smaller currencies, which are sometimes known as exotic currencies. That is when you are dealing in, for example, the Malaysian ringgit or the Thai baht or the Korean won. The traders in the dealing room executes orders of their customers who want to buy or sell foreign currency either for trading purposes, for import or export, or for investment purposes. If the trader takes a view about where a currency mi ght go, he might deal on his own account thereby making a profit for a bank and a good bonus for himselfif he gets it right. Nostro Account Origin: The terms nostro is derived from Latin terms meaning ours in English language. Meaning: It is an account at a foreignbankwhere a domestic bank keeps reserves of aforeign currency. A bank keeps a nostro account so that it does not have to make a currency conversion (which brings with itforeign exchange risk) should an account holder make adepositor awithdrawalin that foreign currency. In simple words, it is an account that a bank holds with a foreign bank. This facilitates easy cash management because currency doesnt need to be converted. When a customer puts his or her money into a bank, the bank is then holding the money for the customer. The customer can call that account a Nostro account because they own the money in the account. The bank calls it a Vostro account because it is the customers money that the bank is holding. Example: If X lives in the United States and ask his local bank to set up a Euro account for him, they will most likely open a Nostro Account with a correspondent agent bank in the European Union that they have a banking relationship with for that specific purpose. The Euro bank will set up the account, but it is not a typical checking account. These accounts are treated differently on the books of the bank. In short, if someone refers to a Nostro account, they are referring to an account which they own. Purpose/Benefits: Generally, companies use these types of accounts when they often either buy or sell in another country but do not have a physical presence that would afford them usage of a typical checking account arrangement. Vostro Account Origin: The terms vostro is again derived from same Latin terms meaning yours in English language. Meaning: It is the account which is held by a foreign bank with a local bank. In this, bank holds on behalf another bank in another country. In other words, Local currencyaccountmaintained by alocalbankfor a foreign(correspondent) bank. For the foreign bank it is a nostro account. In a vostro account, the administrators are not actually the owners of the money. They must keep this account solvent on behalf of its owner. Vostro account administrators, often banks, frequently pay interest to other parties for the use of their money. Example: When X (Buyer) a trader in Base Country wants to purchase $5000 worth of goods by paying cash. Mr.X deposits the cash in his local bank in the countrys currency for the corresponding amount ($5000) then a swift message is sent to the corresponding bank in the foreign country where the local bank holds a NOSTRO account requesting the bank to make the payment to Y (Seller) in his local currency i.e. US Dollars. Thus facilitating the trade between X Y. IF Y wanted to buy something from X then the foreign bank would complete the deal using their VOSTRO account in Xs country. Purpose/Benefits: A vostro account is useful in theForex, or foreign exchange, industries, where money â€Å"go to market† in foreign markets and traded into foreign currency, or alternately, kept as a foreign currency to that destination market. Parties holding vostro accounts are acting on behalf of their customers to get returns. This also happens in a wide variety of stock trading orstock optionstrading situations, where a broker is the party that holds the vostro account for clients. The system of both nostro and vostro accounts facilitate foreign exchange dealings and settlements and allow the settlement of currency transactions between the Countrys (Local) Bank and foreign banks.

The Most Popular Instrument of All Time The Trumpet Essay

Throughout history, music has changed. One instrument has been able to stand the testament of time. Many instruments have had their time, but faded away. The trumpet has survived them all. It is probably the most popular instrument of all time. With talented musicians like Louis Armstrong and Miles Davis, the trumpet has been able to endure. The purpose of this paper is to highlight the careers of Armstrong and Davis, and how the trumpet became their way into Jazz. Louis Armstrong was born on August 4th 1901 in New Orleans, Louisiana. Louis had a hard and painful childhood. In 1922 at the age of 21 Louis moves to Chicago to play cornet in a band lead by Joe Oliver. In September 1924 he leaves Oliver and moves to New York City to join†¦show more content†¦His talent formed a popularity that was surpassed by none. He was the first to present Jazz to the public as a form of art. This changed the direction of Jazz. Miles Davis was born May 25, 1926 in Alton, Illinois and grew up in East St. Louis. For his 13th birthday, Miles was given his first trumpet. By age 16, Miles was playing professionally and received his first real taste of what playing jazz was like when he was asked to stand in for a band that was traveling through and needed to replace a sick horn player. After high school, Miles enrolled in Juilliard in September 1944. Miles spent most of his time playing music with others than actually going to class. Although he was known primarily as a trumpet player, in the world of music he had great influence as an innovative bandleader and as a composer. His music and style were important in the development of improvisational techniques incorporating modes. Miles experiments with modal playing reached its apotheosis in 1959 with his recording of Kind Of Blue. Miles was brought up in the Bebop tradition. When Miles became a leader, things really took off. 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