Short sales, Financial Management

Assignment Help:

Short sales  :

Short sales of a security means borrowing of an underlying security by an investor from other investors who are holding it (in Demat account) and selling it with the understanding that at some point in future the prices of security will move down. During that period the short seller will buy the security and return it to genuine holder, thereby "covering" the short and gaining from the declined prices of security. The investors or short-term traders perform this activity based on some price sensitive information regarding security or sector, or based on personal knowledge regarding movement of security and belief that the security's value will decline in future. In the hope of earning profits he sells on high to buy on low later based on analyzed lower price the security will reach. Hedge Funds and Foreign Institutional Investors (FIIs) are leaders in employing such kind of trading activities to gain from short-term movement of the security prices. Though derivative instruments are available for short selling without holding or borrowing from others, they should be existing in the market for the underlying security in which the short seller is interested.

The trades of all the members in all the securities in Compulsory Rolling Settlement (CRS) are now settled by payment of money and delivery of securities on T + n basis. All deliveries of securities are required to be routed through the Clearing House, except for certain off-market transactions which although required to be reported to the Exchange, may be settled directly between the members concerned.

 


Related Discussions:- Short sales

Riskiness of portfolios b/w riskiness of individual asset, Why does the ris...

Why does the riskiness of portfolios have to be looked at differently than the riskiness of individual assets? The riskiness of portfolios has to be seemed to be at differently

Show the supposition of mm hypothesis, Q. Show the Supposition of MM Hypoth...

Q. Show the Supposition of MM Hypothesis? Supposition of MM Hypothesis:- (i) There are ideal capital markets. (ii) Investors act rationally. (iii) Information regardin

Interpretations of duration, Duration is often referred to as the app...

Duration is often referred to as the approximate percentage change in the price for a 1% change in rates. Now, we will see some other definitions or interpretatio

Explain the term- administration of decisions, Explain the term- administra...

Explain the term- administration of decisions Conformance, compliance and efficiency This is focussed on the "administration of decisions" . Processes and procedures m

Show the working capital in a business, Q. Show the Working capital in a bu...

Q. Show the Working capital in a business? Working capital in a business is essential since of operating cycle. However the need for working capital doesn't come to an end afte

Define banks like to make short-term, Banks like to make short-term, self-l...

Banks like to make short-term, self-liquidating loans to businesses.  Why? Banks like to be capable to see where the funds are similarly to come from like the borrower is able to

Determine the cost of capital in emerging nation, How can we measure a comp...

How can we measure a company's cost of capital in emerging nations, especially when there is no state bond which we could take as a reference? Although there is no state bond w

Capital budgeting, #how to calculate initial investment cash flows ..

#how to calculate initial investment cash flows ..

Aggressive approach of financial management, Q. Aggressive Approach of fina...

Q. Aggressive Approach of financial management? A -firm may be aggressive in financing its assets. An aggressive policy is said to be followed by the firm when it uses short-te

Define leverage, Q. Define leverage? Meaning of Leverage: - The diction...

Q. Define leverage? Meaning of Leverage: - The dictionary significance of the term leverage refers to 'an increased means of accomplishing some purpose'. For instance leverage

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd