Volume : V, Issue : III, March - 2015

Risk Management Techniques: Do They Pay Off?

Dr. Bansi R. Shah

Abstract :

"Risk comes from not knowing what youre doing"– very rightly said by Warren Buffet because risk is troublesome when one is unable to manage them. One thing can be done here that not to take risk. But risk avoidance is not the practical and possible way all the time and the person has to bear it. In such kind of situation risk management techniques are boon to the investors. In financial risk management derivatives play a significant role. In the present study the researcher has studied – Derivatives as a risk management technique. The researcher has taken currency futures as the sample and explored how it can maximize the pay off or minimize the loss under the three market positions taken by the investor: Hedging, Arbitrage and speculation. The researcher has taken numeric examples and with hedging strategies and steps tested weather these techniques pay off or not. The researcher has formulated the research questions and through the calculation on the numerical data found that yes, the risk management technique pays off. The researcher has also tried to elaborate the types of derivatives and their implications in the present study. As all medicines are for the betterment of health, but the medicine is to be given according to the disease to be cured same in case of risk management techniques. All the techniques are not useful in all the situations. It should be chosen by considering several factors. This decision making process can be perfect only by the knowledge and experience as the popular saying goes,

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Article: Download PDF   DOI : 10.36106/ijar  

Cite This Article:

Dr. Bansi R. Shah Risk Management Techniques: Do They Pay Off? Indian Journal of Applied Research, Vol.5, Issue : 3 March 2015

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