Anger

Intense emotion like anger involves a great deal of bodily changes that occur as a result of activation of the sympathetic divisions of the autonomic nervous system. At one time or another every one feels angry. J. B. Wats mentioned that when goal-directed behaviour of a child is obstructed and interfered with, anger is manifested. Thus, anger is the outcome of restriction imposed against desires.In other words, frustrating situation on the way for a goal results in anger. The need for catharsis and role of learning also play significant role in anger. Catharsis refers to the release of anxiety and tension, pent-up feelings and dissatisfaction and emotions resulting from daily life struggle verbally and through actions. These are directed towards any one anything that causes anger in the adult person.Children learn to show attack and aggressive behaviours by observing cartoons, movies, and T. V. serial and aggressive models, Observation of live scenes of anger and aggressive behaviou r produces more imitation of specific anger action, in one of the experiments by Bandura (1973), nursery school children observed a movie when adults were showing varieties of aggressive behaviour toward an inflated doll.After observing the film both boys and girls demonstrated the same of aggressive behaviour toward the inflated doll. These aggressive responses include punching, throwing, striking with a hammer, kicking and pounding number of blows to the doll. Freud inferred from his observational studies of numerous patients and children that aggression is an inborn instinct. Lorenz too believed that anger aggressions are innate instincts with animals and human beings.This basic anger behaviour should have some outlets, such as competitive sports, hard labor such as gardening, walking, recognizing the stimulus that provokes anger aggression, a persuasive leader, and not rewarding any aggressive behaviour etc. Studies indicated in the past that rage- an extreme form of anger, rela tively uncontrollable – can be at times real and at times partial which are termed as â€Å"sham rage†. Sham rage was demonstrated in cats, dogs, primates and other animals by stimulating particular areas of brain, especially the hypothalamus.

A Study on Futures and Potions

A STUDY ON FUTURES AND POTIONS Project submitted in partial fulfillment for the award of the degree of MASTER OF BUSINESS ADMINISTRATION DECLARATION I hereby declare that this Project Report titled, â€Å"A STUDY ON THE DERIVATIVES† submitted by me to the Department OF BUSINESS ADMINISTRATION, XXXX and is a bonafide work under taken by me and it is not submitted to any other University or Institution for the award of any degree diploma / certificate or published any time before. Name and Address of the StudentSignature of the student Date : ACKNOWLEDGEMENTI wish to express my sincere deep sense of gratitude and also thank my guide XXX, Faculty of Finance for his significant suggestions and help in every aspect to accomplish the project work. His persisting encouragement, everlasting patience and keen interest in discussions have benefited me to the extent that cannot be spanned by words. I take my pleasure to acknowledge XXXX for the facilities provided and constant encouragem ent. Finally I express bows to everyone who are involved with this project. CONTENTS INTRODUCTION METHODOLOGY 1 FUTURES 2 OPTIONS ANALYSIS OF THE STUDYSUMMARY AND CONCLUSIONS BIBLIOGRAPHY INTRODUCTION Nature of the problem: The turnover of the stock exchanges has been tremendously increasing from last 10 years. The number of trades and the number of investors, who are participating, have increased. The investors are willing to reduce their risk, so they are seeking for the risk management tools. Prior to SEBI abolishing the BADLA system, the investors had this system as a source of reducing the risk, as it has many problems like no strong margining system, unclear expiration date and generating counter party risk.In view of this problem SEBI abolished the BADLA system. After the abolition of the BADLA system, the investors are seeking for a hedging system, which could reduce their portfolio risk. SEBI thought the introduction of the derivatives trading, as a first step it has set up a 24 member committee under the chairmanship of Dr. L. C. Gupta to develop the appropriate regulatory framework for derivative trading in India, SEBI accepted the recommendations of the committee on May 11, 1998 and approved the phased introduction of the derivatives trading beginning with stock index futures.There are many investors who are willing to trade in the derivative segment, because of its advantages like limited loss and unlimited profit by paying the small premiums. IMPORTANCE OF THE STUDY: To evaluate the profit/loss position of option holder and option writer. OBJECTIVES OF THE STUDY: ? To analyze the derivatives market in India. ? To analyze the operations of futures and options. ? To find out the profit/loss position of the option writer and option holder. ? To study about risk management with the help of derivatives. SCOPE OF THE STUDY:The study is limited to â€Å"Derivatives† with special reference to futures and options in the Indian context and the Hyder abad stock exchange has been taken as a representative sample for the study. The study can’t be said as totally perfect. Any alteration may come. The study has only made a humble attempt at evaluating derivatives market only in Indian context. The study is not based on the international perspective of derivatives markets, which exists in NASDAQ, NYSE etc. LIMITATIONS OF THE STUDY: The following are the limitations of this study. The scrip chosen for analysis is STATE BANK OF INDIA and the contract taken is March 2005 ending one-month contract. ? The data collected is completely restricted to the STATE BANK OF INDIA of March 2005; hence this analysis cannot be taken as universal. METHODOLOGY The emergence of the market for derivative products, most notably forwards, futures and options, can be traced back to the willingness of risk-averse economic agents to guard themselves against uncertainties arising out of fluctuations in asset prices.By their very nature, the financial ma rkets are marked by a very high degree of volatility. Through the use of derivative products, it is possible to partially or fully transfer price risks by locking–in asset prices. As instruments of risk management, these generally do not influence the fluctuations in the underlying asset prices. However, by locking-in asset prices, derivative products minimize the impact of fluctuations in asset prices on the profitability and cash flow situation of risk-averse investors. Derivatives are risk management instruments, which derive their value from an underlying asset.The underlying asset can be bullion, index, share, bonds, currency, interest etc. Banks, securities firms, companies and investors to hedge risks, to gain access to cheaper money and to make profit, use derivatives. Derivatives are likely to grow even at a faster rate in future. DEFINITION: Derivative is a product whose value is derived from the value of an underlying asset in a contractual manner. The underlying a sset can be equity, forex, commodity or any other asset. Securities Contracts (Regulation) Act, 1956 (SC(R) A) defines â€Å"derivative† to include – 1.A security derived from a debt instrument, share, loan whether secured or unsecured, risk instrument or contract for differences or any other form of security. 2. A contract which derives its value from the prices, or index of prices, of underlying securities. PARTICIPANTS: The following three broad categories of participants in the derivatives market. HEDGERS: Hedgers face risk associated with the price of an asset. They use futures or options markets to reduce or eliminate this risk. SPECULATORS: Speculators wish to bet on future movements in the price of an asset.Futures and options contracts can give them an extra leverage; that is, they can increase both the potential gains and potential losses in a speculative venture. ARBITRAGEURS: Arbitrageurs are in business to take advantage of a discrepancy between prices in two different markets. If, for example, they see the futures price of an asset getting out of line with the cash price, they will take offsetting positions in the two markets to lock in a profit. FUNCTIONS OF DERIVATIVES MARKET: The following are the various functions that are performed by the derivatives markets.They are: ? Prices in an organized derivatives market reflect the perception of market participants about the future and lead the prices of underlying to the perceived future level. ? Derivatives market helps to transfer risks from those who have them but may not like them to those who have an appetite for them. ? Derivative trading acts as a catalyst for new entrepreneurial activity. ? Derivatives markets help increase savings and investment in the long run. Types of derivatives: the following are the various types of derivatives. They are: Forwards:A forward contract is a customized contract between two entities, where settlement takes place on a specific date in the futu re at today’s pre-agreed price. Futures: A futures contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. Options: Options are of two types – calls and puts. Calls give the buyer the right but not the obligation to buy a given quantity of the underlying asset, at a given price on or before a given future date. Puts give the buyer the right, but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given date.Warrants: Options generally have lives of upto one year; the majority of options traded on options exchanges having a maximum maturity of nine months. Longer-dated options are called warrants and are generally traded over-the-counter. LEAPS: The acronym LEAPS means Long-Term Equity Anticipation Securities. These are options having a maturity of upto three years. Baskets: Basket options are options on portfolios of underlying assets. The underlying asset i s usually a moving average of a basket of assets. Equity index options are a form of basket options. Swaps:Swaps are private agreements between two parties to exchange cash flows in the future according to a prearranged formula. They can be regarded as portfolios of forward contracts. The two commonly used swaps are: Interest rate swaps: These entail swapping only the interest related cash flows between the parties in the same currency. _ Currency swaps: These entail swapping both principal and interest between the parties, with the cash flows in one direction being in a different currency than those in the opposite Direction. Swaptions: Swaptions are options to buy or sell a swap that will become operative at the expiry of the options.Thus a swaption is an option on a forward swap. RATIONALE BEHIND THE DEVELOPMENT OF DERIVATIVES: Holding portfolio of securities is associated with the risk of the possibility that the investor may realize his returns, which would be much lesser than what he expected to get. There are various factors, which affect the returns: 1. Price or dividend (interest). 2. Some are internal to the firm like – ? Industrial policy ? Management capabilities ? Consumer’s preference ? Labor strike, etc. These forces are to a large extent controllable and are termed as non Systematic risks.An investor can easily manage such non-systematic by having a well – diversified portfolio spread across the companies, industries and groups so that a loss in one may easily be compensated with a gain in other. There are yet other types of influences which are external to the firm, cannot be controlled and affect large number of securities. They are termed as systematic risk. They are: 1. Economic 2. Political 3. Sociological changes are sources of systematic risk. For instance, inflation, interest rate, etc. their effect is to cause prices of nearly all individual stocks to move together in the same manner.We therefore quite often find s tock prices falling from time to time in spite of company’s earnings rising and vice versa. Rationale behind the development of derivatives market is to manage this systematic risk, liquidity and liquidity in the sense of being able to buy and sell relatively large amounts quickly without substantial price concessions. In debt market, a large position of the total risk of securities is systematic. Debt instruments are also finite life securities with limited marketability due to their small size relative to many common stocks.Those factors favour for the purpose of both portfolio hedging and speculation, the introduction of a derivative security that is on some broader market rather than an individual security. India has vibrant securities market with strong retail participation that has rolled over the years. It was until recently basically cash market with a facility to carry forward positions in actively traded ‘A’ group scrips from one settlement to another b y paying the required margins and borrowing some money and securities in a separate carry forward session held for this purpose.However, a need was felt to introduce financial products like in other financial markets world over which are characterized with high degree of derivative products in India. Derivative products allow the user to transfer this price risk by looking in the asset price there by minimizing the impact of fluctuations in the asset price on his balance sheet and have assured cash flows. Derivatives are risk management instruments, which derive their value from an underlying asset. The underlying asset can be bullion, index, shares, bonds, currency etc.DERIVATIVE SEGMENT AT NATIONAL STOCK EXCHANGE: The derivatives segment on the exchange commenced with S&P CNX Nifty Index futures on June 12, 20007. The F&O segment of NSE provides trading facilities for the following derivative segment: 1. Index Based Futures 2. Index Based Options 3. Individual Stock Options 4. Ind ividual Stock Futures |COMPANY NAME |CODE |LOT SIZE | |ABB Ltd. ABB |200 | |Associated Cement Co. Ltd. |ACC |750 | |Allahabad Bank |ALBK |2450 | |Andhra Bank |ANDHRABANK |2300 | |Arvind Mills Ltd. ARVINDMILL |2150 | |Ashok Leyland Ltd |ASHOKLEY |9550 | |Bajaj Auto Ltd. |BAJAJAUTO |200 | |Bank of Baroda |BANKBARODA |1400 | |Bank of India |BANKINDIA |1900 | |Bharat Electronics Ltd. BEL |550 | |Bharat Forge Co Ltd |BHARATFORG |200 | |Bharti Tele-Ventures Ltd |BHARTI |1000 | |Bharat Heavy Electricals Ltd. |BHEL |300 | |Bharat Petroleum Corporation Ltd. |BPCL |550 | |Cadila Healthcare Limited |CADILAHC 500 | |Canara Bank |CANBK |1600 | |Century Textiles Ltd |CENTURYTEX |850 | |Chennai Petroleum Corp Ltd. |CHENNPETRO |950 | |Cipla Ltd. |CIPLA |1000 | |Kochi Refineries Ltd |COCHINREFN |1300 | |Colgate Palmolive (I) Ltd. COLGATE |1050 | |Dabur India Ltd. |DABUR |1800 | |GAIL (India) Ltd. |GAIL |1500 | |Great Eastern Shipping Co. Ltd. |GESHIPPING |1350 | |Glaxosmithkline Pharma Ltd. |GLAXO |300 | |Grasim Industries Ltd. |GRASIM |175 | |Gujarat Ambuja Cement Ltd. GUJAMBCEM |550 | |HCL Technologies Ltd. |HCLTECH |650 | |Housing Development Finance Corporation Ltd. |HDFC |300 | |HDFC Bank Ltd. |HDFCBANK |400 | |Hero Honda Motors Ltd. |HEROHONDA |400 | |Hindalco Industries Ltd. |HINDALC0 |150 | |Hindustan Lever Ltd. HINDLEVER |2000 | |Hindustan Petroleum Corporation Ltd. |HINDPETRO |650 | |ICICI Bank Ltd. |ICICIBANK |700 | |Industrial development bank of India Ltd. |IDBI |2400 | |Indian Hotels Co. Ltd. |INDHOTEL |350 | |Indian Rayon And Industries Ltd | INDRAYON |500 | |Infosys Technologies Ltd. INFOSYSTCH |100 | |Indian Overseas Bank |IOB |2950 | |Indian Oil Corporation Ltd. |IOC |600 | |ITC Ltd. |ITC |150 | |Jet Airways (India) Ltd. |JETAIRWAYS |200 | |Jindal Steel & Power Ltd |JINDALSTEL |250 | |Jaiprakash Hydro-Power Ltd. JPHYDRO |6250 | |Cummins India Ltd |KIRLOSKCUM |1900 | |LIC Housing Finance Ltd |LICHSGFIN |850 | |Mahindra & Mahindra Ltd. |M&M |625 | |Matrix La boratories Ltd. |MATRIXLABS |1250 | |Mangalore Refinery and Petrochemicals Ltd. MRPL |4450 | |Mahanagar Telephone Nigam Ltd. |MTNL |1600 | |National Aluminium Co. Ltd. |NATIONALUM |1150 | |Neyveli Lignite Corporation Ltd. |NEYVELILIG |2950 | |Nicolas Piramal India Ltd |NICOLASPIR |950 | |National Thermal Power Corporation Ltd. NTPC |3250 | |Oil & Natural Gas Corp. Ltd. |ONGC |300 | |Oriental Bank of Commerce |ORIENTBANK |600 | |Patni Computer System Ltd |PATNI |650 | |Punjab National Bank |PNB |600 | |Ranbaxy Laboratories Ltd. RANBAXY |200 | |Reliance Energy Ltd. |REL |550 | |Reliance Capital Ltd |RELCAPITAL |1100 | |Reliance Industries Ltd. |RELIANCE |600 | |Satyam Computer Services Ltd. SATYAMCOMP |600 | |State Bank of India |SBIN |500 | |Shipping Corporation of India Ltd. |SCI |1600 | |Siemens Ltd |SIEMENS |150 | |Sterlite Industries (I) Ltd |STER |350 | |Sun Pharmaceuticals India Ltd. SUNPHARMA |450 | |Syndicate Bank |SYNDIBANK |3800 | |Tata Chemicals Ltd |TATACHEM |1350 | |Tata Consultancy Services Ltd |TCS |250 | |Tata Power Co.Ltd. |TATAPOWER |800 | |Tata Tea Ltd. |TATATEA |550 | |Tata Motors Ltd. |TATAMOTORS |825 | |Tata Iron and Steel Co. Ltd. |TISCO |675 | |Union Bank of India |UNIONBANK |2100 | |UTI Bank Ltd. UTIBANK |900 | |Vijaya Bank |VIJAYABANK |3450 | |Videsh Sanchar Nigam Ltd |VSNL |1050 | |Wipro Ltd. |WIPRO |300 | |Wockhardt Ltd. |WOCKPHARMA |600 | REGULATORY FRAMEWORK:The trading of derivatives is governed by the provisions contained in the SC ( R ) A, the SEBI Act, the and the regulations framed there under the rules and byelaws of stock exchanges. Regulation for Derivative Trading: SEBI set up a 24 member committed under Chairmanship of Dr. L. C. Gupta develop the appropriate regulatory framework for derivative trading in India. The committee submitted its report in March 1998. On May 11, 1998 SEBI accepted the recommendations of the committee and approved the phased introduction of Derivatives trading in India beginning with Stock Index F utures.SEBI also approved he â€Å"Suggestive bye-laws† recommended by the committee for regulation and control of trading and settlement of Derivatives contracts. The provisions in the SC (R) A govern the trading in the securities. The amendment of the SC (R) A to include â€Å"DERIVATIVES† within the ambit of ‘Securities’ in the SC (R ) A made trading in Derivatives possible within the framework of the Act. 1. Any exchange fulfilling the eligibility criteria as prescribed in the L. C. Gupta committee report may apply to SEBI for grant of recognition under Section 4 of the SC (R) A, 1956 to start Derivatives Trading.The derivatives exchange/segment should have a separate governing council and representation of trading / clearing members shall be limited to maximum of 40% of the total members of the governing council. The exchange shall regulate the sales practices of its members and will obtain approval of SEBI before start of Trading in any derivative co ntract. 2. The exchange shall have minimum 50 members. 3. The members of an existing segment of the exchange will not automatically become the members of the derivative segment. The members of the derivative segment need to fulfill the eligibility conditions as lay down by the L.C. Gupta Committee. 4. The clearing and settlement of derivates trades shall be through a SEBI approved Clearing Corporation / Clearing house. Clearing Corporation / Clearing House complying with the eligibility conditions as lay down By the committee have to apply to SEBI for grant of approval. 5. Derivatives broker/dealers and Clearing members are required to seek registration from SEBI. 6. The Minimum contract value shall not be less than Rs. 2 Lakh. Exchanges should also submit details of the futures contract they purpose to introduce. 7.The trading members are required to have qualified approved user and sales person who have passed a certification programme approved by SEBI. FUTURES DEFINITION: A Futur es contract is an agreement between two parties to buy or sell an asset at a certain time in the future at a certain price. To facilitate liquidity in the futures contract, the exchange specifies certain standard features of the contract. The standardized items on a futures contract are: ? Quantity of the underlying ? Quality of the underlying ? The date and the month of delivery ? The units of price quotations and minimum price change ? Locations of settlementTYPES OF FUTURES: On the basis of the underlying asset they derive, the futures are divided into two types: ? Stock futures: The stock futures are the futures that have the underlying asset as the individual securities. The settlement of the stock futures is of cash settlement and the settlement price of the future is the closing price of the underlying security. ? Index futures: Index futures are the futures, which have the underlying asset as an Index. The Index futures are also cash settled. The settlement price of the Inde x futures shall be the closing value of the underlying index on the expiry date of the contract.Parties in the Futures Contract: There are two parties in a future contract, the Buyer and the Seller. The buyer of the futures contract is one who is LONG on the futures contract and the seller of the futures contract is one who is SHORT on the futures contract. The pay off for the buyer and the seller of the futures contract are as follows. PAYOFF FOR A BUYER OF FUTURES: [pic] CASE 1: The buyer bought the future contract at (F); if the futures price goes to E1 then the buyer gets the profit of (FP). CASE 2: The buyer gets loss when the future price goes less than (F), if the futures price goes to E2 then the buyer gets the loss of (FL).PAYOFF FOR A SELLER OF FUTURES: [pic] F – FUTURES PRICE E1, E2 – SETTLEMENT PRICE. CASE 1: The Seller sold the future contract at (f); if the futures price goes to E1 then the Seller gets the profit of (FP). CASE 2: The Seller gets loss when the future price goes greater than (F), if the futures price goes to E2 then the Seller gets the loss of (FL). MARGINS: Margins are the deposits, which reduce counter party risk, arise in a futures contract. These margins are collected in order to eliminate the counter party risk. There are three types of margins: Initial Margin:Whenever a futures contract is signed, both buyer and seller are required to post initial margin. Both buyer and seller are required to make security deposits that are intended to guarantee that they will infact be able to fulfill their obligation. These deposits are Initial margins and they are often referred as performance margins. The amount of margin is roughly 5% to 15% of total purchase price of futures contract. Marking to Market Margin: The process of adjusting the equity in an investor’s account in order to reflect the change in the settlement price of futures contract is known as MTM Margin.Maintenance margin: The investor must keep the fut ures account equity equal to or greater than certain percentage of the amount deposited as Initial Margin. If the equity goes less than that percentage of Initial margin, then the investor receives a call for an additional deposit of cash known as Maintenance Margin to bring the equity up to the Initial margin. Role of Margins: The role of margins in the futures contract is explained in the following example. S sold a Satyam February futures contract to B at Rs. 300; the following table shows the effect of margins on the contract.The contract size of Satyam is 1200. The initial margin amount is say Rs. 20000, the maintenance margin is 65% of Initial margin. |DAY |PRICE OF SATYAM |EFFECT ON BUYER (B) |EFFECT ON SELLER (S) |REMARKS | | | |MTM |MTM | | | | |P/L |P/L | | | | |Bal. in Margin |Bal. n Margin | | | | | | | | |1 | | | | | | | | | |Contract is entered and| | |300. 00 | | |initial margin is | | | | | |deposited. |2 | | | | | | | | | | | | | |+13,200 | | | | | | |-13,200 |B got profit and S got | | |311(price increased) | |+13,200 |loss, S deposited | |3 | | | |maintenance margin. | | | | | | | | | | | |B got loss and | | | | | |deposited maintenance | |4 | |-28,800 | |margin. | | |+15,400 |+28,800 | | | | | | | | | |287 | | |B got profit, S got | | | | | |loss. Contract settled| | | | | |at 305, totally B got | | | |+21,600 | |profit and S got loss. | | | |-21,600 | | | | | | | | | |305 | | | | Pricing the Futures: The fair value of the futures contract is derived from a model known as the Cost of Carry model. This model gives the fair value of the futures contract. Cost of Carry Model: F=S (1+r-q) t Where F – Futures Price S – Spot price of the Underlying r – Cost of Financing q – Expected Dividend Yield T – Holding Period. FUTURES TERMINOLOGY: Spot price: The price at which an asset trades in the spot market. Futures price: The price at which the futures contract trades in the futures market.Contract cycle: The period over which a contract trades. The index futures contracts on the NSE have one-month, two-months and three-month expiry cycles which expire on the last Thursday of the month. Thus a January expiration contract expires on the last Thursday of January and a February expiration contract ceases trading on the last Thursday of February. On the Friday following the last Thursday, a new contract having a three-month expiry is introduced for trading. Expiry date: It is the date specified in the futures contract. This is the last day on which the contract will be traded, at the end of which it will cease to exist. Contract size:The amount of asset that has to be delivered under one contract. For instance, the contract size on NSE’s futures market is 200 Nifties. Basis: In the context of financial futures, basis can be defined as the futures price minus the spot price. There will be a different basis for each delivery month for each contract. In a normal market, basis will be positive. This reflects that futures prices normally exceed spot prices. Cost of carry: The relationship between futures prices and spot prices can be summarized in terms of what is known as the cost of carry. This measures the storage cost plus the interest that is paid to finance the asset less the income earned on the asset. Open Interest:Total outstanding long or short positions in the market at any specific time. As total long positions for market would be equal to short positions, for calculation of open interest, only one side of the contract is counted. OPTIONS DEFINITION: Option is a type of contract between two persons where one grants the other the right to buy a specific asset at a specific price within a specified time period. Alternatively the contract may grant the other person the right to sell a specific asset at a specific price within a specific time period. In order to have this right, the option buyer has to pay the seller of the option premium. The assets on which optio ns can be derived are stocks, commodities, indexes etc.If the underlying asset is the financial asset, then the options are financial options like stock options, currency options, index options etc, and if the underlying asset is the non-financial asset the options are non-financial options like commodity options. PROPERTIES OF OPTIONS: Options have several unique properties that set them apart from other securities. The following are the properties of options: ? Limited Loss ? High Leverage Potential ? Limited Life PARTIES IN AN OPTION CONTRACT: 1. Buyer of the Option: The buyer of an option is one who by paying option premium buys the right but not the obligation to exercise his option on seller/writer. . Writer/Seller of the Option: The writer of a call/put options is the one who receives the option premium and is there by obligated to sell/buy the asset if the buyer exercises the option on him. . TYPES OF OPTIONS: The options are classified into various types on the basis of var ious variables. The following are the various types of options: I) On the basis of the Underlying asset: On the basis of the underlying asset the options are divided into two types: ? INDEX OPTIONS: The Index options have the underlying asset as the index. ? STOCK OPTIONS: A stock option gives the buyer of the option the right to buy/sell stock at a specified price.Stock options are options on the individual stocks, there are currently more than 50 stocks are trading in this segment. II. On the basis of the market movement: On the basis of the market movement the options are divided into two types. They are: ? CALL OPTION: A call options is bought by an investor when he seems that the stock price moves upwards. A call option gives the holder of the option the right but not the obligation to buy an asset by a certain date for a certain price. ? PUT OPTION: A put option is bought by an investor when he seems that the stock price moves downwards. A put option gives the holder of the op tion right but not the obligation to sell an asset by a certain date for a certain price. III. On the basis of exercise of Option:On the basis of the exercising of the option, the options are classified into two categories. ? AMERICAN OPTION: American options are options that can be exercised at any time up to the expiration date, most exchange-traded options are American. ? EUROPEAN OPTION: European options are options that can be exercised only on the expiration date itself. European options are easier to analyze than American options. PAY-OFF PROFILE FOR BUYER OF A CALL OPTION: The pay-off of a buyer options depends on the spot price of the underlying asset. The following graph shows the pay-off of buyer of a call option: S-Strike priceOTM – Out of the Money SP -Premium/LossATM – At the MoneyE1 – Spot price 1 ITM – In The Money E2 – Spot price 2 SR – profit at spot price E1 CASE 1: (Spot price > Strike Price) As the spot price (E1) of the underlying asset is more than strike price (S). The buyer gets the profit of (SR), if price increases more than E1 than profit also increase more than SR. CASE 2: (Sport price < Strike Price) As the spot price (E2) of the underlying asset is less than strike price (s). The buyer gets loss of (SP), if price goes down less than E2 than also his loss is limited to his premium (SP). PAY – OFF PROFILE FOR SELLER OF A CALL OPTION:The pay-off of seller of the call option depends on the spot price of the underlying asset. The following graph shows the pay-off of seller of a call option: [pic] S-Strike priceITM – In the Money SP – Premium/profitATM – At the Money E1-Spot price 1OTM – Out of The Money E2 -Spot price 2 SR-profit at spot price E1 CASE 1: (Spot price < Strike price) As the spot price (E1) of the underlying asset is less than strike price (S). The seller gets the profit of (SP), if the price decreases less than E1 than also profit of the seller does not exceed (SP). CASE 2: (Spot price > Strike price) As the spot price (E2) of the underlying asset is more than strike price (S).The seller gets loss of (SR), if price goes more less than E2 than the loss of the seller also increase more than (SR). PAY-OFF PROFILE FOR BUYER OF A PUT OPTION: The payoff of buyer of the option depends on the spot price of the underlying asset. The following graph shows the pay off of the buyer of a call option: [pic] S-Strike priceITM-In The Money SP-Premium/profitOTM-Out of The Money E1-Spot price 1ATM-At The Money E2-Spot price 2 SR-profit at spot price E1 CASE 1: (Spot price < Strike price) As the spot price (E1) of the underlying asset is less than strike price (S). The buyer gets the profit of (SR), if price decreases less than E1 than the profit also increases more than (SR). CASE 2: (Spot price > Strike price)As the spot price (E2) of the underlying asset is more than strike price (s), the buyer gets loss of (SP), if price goes more than E2 than the loss of the buyer is limited to his premium (SP). PAY-OFF PROFILE FOR SELLER OF A PUT OPTION: The pay off of seller of the option depends on the spot price of the underlying asset. The following graph shows the pay-off of seller of a put option: [pic] S-Strike priceITM-In The Money SP-Premium/profitATM-At The Money E1-Spot price 1OTM-Out of The Money E2-Spot price 2 SR-profit at spot price E1 CASE 1: (Spot price < Strike price) As the spot price (E1) of the underlying asset is less than strike price (S), the seller gets the loss of (SR), if price decreases less than E1 than the loss also increases more than (SR). CASE 2: (Spot price > Strike price)As the spot price (E2) of the underlying asset is more than strike price (S), the seller gets profit of (SP), if price goes more than E2 than the profit of the seller is limited to his premium (SP). FACTORS AFFECTING THE PRICE OF AN OPTION: The following are the various factors that affect the price of an option. They are: Stoc k price: The pay-off from a call option is the amount by which the stock price exceeds the strike price. Call options therefore become more valuable as the stock price increases and vice versa. The pay-off from a put option is the amount; by which the strike price exceeds the stock price. Put options therefore become more valuable as the stock price increases and vice versa. Strike price:In the case of a call, as the strike price increases, the stock price has to make a larger upward move for the option to go in-the –money. Therefore, for a call, as the strike price increases, options become less valuable and as strike price decreases, options become more valuable. Time to expiration: Both Put and Call American options become more valuable as the time to expiration increases. Volatility: The volatility of n a stock price is a measure of uncertain about future stock price movements. As volatility increases, the chance that the stock will do very well or very poor increases. Th e value of both Calls and Puts therefore increase as volatility increase.Risk-free interest rate: The put option prices decline as the risk – free rate increases where as the prices of calls always increase as the risk – free interest rate increases. Dividends: Dividends have the effect of reducing the stock price on the ex dividend date. This has a negative effect on the value of call options and a positive affect on the value of put options. PRICING OPTIONS The Black Scholes formulas for the prices of European Calls and puts on a non-dividend paying stock are: CALL OPTION: C = SN (D1)-Xe-rtN(D2) PUT OPTION: P = Xe-rtN(-D2)-SN (-D2) C – VALUE OF CALL OPTION S – SPOT PRICE OF STOCK X – STRIKE PRICE r – ANNUAL RISK FREE RETURN – CONTRACT CYCLE D1 – (ln(s/x) +(r+ )/2) t)/ D2 – D1- Options Terminology: Strike Price: The price specified in the options contract is known as the Strike price or Exercise price. Option Premium: O ption premium is the price paid by the option buyer to the option seller. Expiration Date: The date specified in the options contract is known as the expiration date. In-The-Money Option: An in the money option is an option that would lead to a positive cash inflow to the holder if it is exercised immediately. At-The-Money Option: An at the money option is an option that would lead to zero cash flow if it is exercised immediately. Out-Of-The-Money Option:An out of the money option is an option that would lead to a negative cash flow if it is exercised immediately. Intrinsic Value of an Option: The intrinsic value of an option is ITM, if option is ITM. If the option is OTM, its intrinsic value is ZERO. Time Value of an Option: The time value of an option is the difference between its premium and its intrinsic value. DESCRIPTION OF THE METHOD: The following are the steps involved in the study. 1. Selection of the scrip: The scrip selection is done on a random basis and the scrip selec ted is RELIANCE COMMUNICATIONS. The lot size of the scrip is 500. Profitability position of the option holder and option writer is studied. 2. Data collection:The data of the RELIANCE COMMUNICATIONS has been collected from the â€Å"The Economic Times† and the internet. The data consists of the March contract and the period of data collection is from 30th December 2008 to 31st January 2008. 3. Analysis: The analysis consists of the tabulation of the data assessing the profitability positions of the option holder and the option writer, representing the data with graphs and making the interpretations using the data. ANALYSIS ANALYSIS The objective of this analysis is to evaluate the profit/loss position of option holder and option writer. This analysis is based on the sample data, taken RELIANCE COMMUNICATIONS scrip. This analysis considered the March ending contract of the SBI.The lot size of SBI is 500. The time period in which this analysis is done is from 30/12/2007 To 31/0 1/2008 Price of SBI in the Cash Market. |DATE |MARKET PRICE | | | | |30-Dec-07 |685. 1 | |31-Dec-07 |714. 65 | |1-Jan-08 |695. 6 | |2-Jan-08 |706. 4 | |3-Jan-08 |717. 1 | |4-Jan-08 |713. 45 | |7-Jan-08 |726. 6 | |8-Jan-08 |724. 05 | |9-Jan-08 |720. 85 | |10-Jan-08 |742. 1 | |11-Jan-08 |736. | |14-jan-08 |734. 1 | |15-Jan-08 |731. 75 | |16-Jan-08 |728 | |17-Jan-08 |726. 2 | |18-Jan-08 | | | |727. 8 | | | | |21-Jan-08 |722. 7 | |22-Jan-08 |693. 25 | |23-Jan-08 |657. 7 | |24-Jan-08 |664. 4 | |28-Mar-08 |665. 6 | |29-Jan-08 |641. 7 | |30-Jan-08 |661. 05 | |31-Jan-08 |654. 8 | pic] The closing price of SBI at the end of the contract period is 654. 80 and this is considered as settlement price. The following table explains the amount of transaction between option holder and option writer. ? The first column explains the trading date. ? The second column explains the market price in cash segment on that date. ? The call column explains the call/put options which are considered. Every call/ put has three sub columns. ? The first column consists of the premium value per share of the contracts, second column consists of the volume of the contract, and the third column consists of total premium value paid by the buyer. ?NET PAYOFF FOR CALL OPTION HOLDERS AND WRITERS |MARKET PRICE |CALLS |VOLUME (‘000) |PREMIUM (‘000) |PROFIT TO HOLDER|NET PROFIT TO |NET PROFIT TO | | | | | |(‘000) |HOLDER (‘000) |BUYER (‘000) | | | | | | | | | |654. 8 |640 |199. 5 |3634. 15 |2952. 6 |-681. 55 |681. 55 | |654. 8 |660 |1463 |21600. 35 |0 |-21600. 35 |21600. 35 | |654. |680 |2008 |51831. 53 |0 |-51831. 525 |51831. 525 | |654. 8 |700 |3297 |85603. 45 |0 |-85603. 45 |85603. 45 | |654. 8 |720 |3796. 5 |74881. 93 |0 |-74881. 925 |74881. 925 | |654. 8 |740 |2309. 5 |30208. 4 |0 |-30208. 4 |30208. 4 | OBSERVATIONS AND FINDINGS: ? Six call options are considered with six different strike prices. ? The current market price on the expiry date is Rs. 654. 80 and this is c onsidered as final settlement price. The premium paid by the option holders whose strike price is far and greater than the current market price have paid high amounts of premium than those who are near to the current market price. ? The call option holders whose strike price is less than the current market price are said to be In-The-Money. The calls with strike price 640 are said to be In-The-Money, since, if they exercise they will get profits. ? The call option holders whose strike price is less than the current market price are said to be Out-Of-The-Money. The calls with strike price of 660, 680,700,720,740 are said to be Out-Of-The-Money, since, if they exercise, they will get losses. [pic] FINDINGS:The premium of the options with strike price of 700 and 720 is high, since most of the period of the contract the cash market is moving around 700 mark. [pic] FINDINGS: ? The contracts with strike price 660, 680, 700, 720, 740 get no profit, since their strike price is more than the settlement price. ? The contract with strike price 640 gets the profit. NET PAY OFF OF PUT OPTION HOLDERS AND WRITERS. |MARKET PRICE |PUTS |VOLUME (‘000) |PREMIUM (‘000) |PROFIT TO HOLDER |NET PROFIT TO HOLDER |NET PROFIT TO WRITER| | | | | |(‘000) |(‘000) |(‘000) | | | | | | | | | |654. |600 |25 |47. 625 |0 |-47. 625 |47. 625 | |654. 8 |640 |323. 5 |993. 5 |0 |-993. 5 |993. 5 | |654. 8 |660 |1239. 5 |9506. 575 |6445. 4 |-3061. 175 |3061. 175 | |654. 8 |680 |1399. 5 |21894 |35267. 4 |13373. 4 |-13373. 4 | |654. 8 |700 |1858 |30871. 28 |83981. 6 |53110. 325 |-53110. 325 | |654. |720 |1468. 5 |23727. 83 |95746. 2 |72018. 375 |-72018. 375 | | | | | | | | | OBSERVATIONS AND FINDINGS: ? Six put options are considered with six different strike prices. ? The current market price on the expiry date is Rs. 654. 80 and this is considered as the final settlement price. ? The premium paid by the option holders whose strike price is far and greater than the current market price have paid high amount of premium than those who are near to the current market price. The put option holders whose strike price is more than the current market price are said to be In-The-Money. The puts with strike price 660,680,700,720 are said to be In-The-Money, since, if they exercise they will get profits. ? The put option holders whose strike price is less than the current market price are said to be Out-Of-The-Money. The puts with strike price of 600,640 are said to be Out-Of-The-Money, since, if they exercise their puts, they will get losses. [pic] FINDINGS: ? The premium of the option with strike price 700 is higher when compared to other strike prices. This is because of the movement of the cash market price of the SBI between 640 and 720. [pic] FINDINGS: The put option holders whose strike price is more than the settlement price are In-The-Money. ? The put options whose strike price is less than the settlement price are Out-Of-The-Money. DATA OF SBI THE FUT URES OF THE JANUARY MONTH |DATE |FUTURES CLOSING PRICE (Rs. ) |CASH CLOSING PRICE (Rs. ) | | | | | |30-Dec-07 |689. 6 |685. 1 | |31-Dec-07 |720. 65 |714. 65 | |1-Jan-08 |700. 5 |695. 6 | |2-Jan-08 |710. 9 |706. 4 | |3-Jan-08 |720. 85 |717. 1 | |4-Jan-08 |716. 85 |713. 45 | |7-Jan-08 |729. 2 |726. 6 | |8-Jan-08 |728. 25 |724. 05 | |9-Jan-08 |723. 35 |720. 5 | |10-Jan-08 |745. 3 |742. 1 | |11-Jan-08 |741. 35 |736. 9 | |14-Jan-08 |738. 95 |734. 1 | |15-Jan-08 |735. 7 |731. 75 | |16-Jan-08 |733. 15 |728 | |17-Jan-08 |730. 75 |726. 2 | |18-Jan-08 |732. |727. 8 | |21-Jan-08 |725. 25 |722. 7 | |22-Jan-08 |695 |693. 25 | |23-Jan-08 |660. 1 |657. 7 | |24-Jan-08 |666. 7 |664. 4 | |28-Jan-08 |667. 75 |665. 6 | |29-Jan-08 |642. 7 |641. 7 | |30-Jan-08 |662. 5 |661. 05 | |31-Jan-08 |655. 95 |654. 8 | [pic] OBSERVATIONS AND FINDINGS: The cash market price of the SBI is moving along with the futures price. ? If the buy price of the futures is less than the settlement price, then the buyer of the f utures get profit. ? If the selling price of the futures is less than the settlement price, then the seller incur losses. SUMMARY, CONCLUSIONS AND RECOMMENDATINONS SUMMARY ? Derivatives market is an innovation to cash market. Approximately its daily turnover reaches to the equal stage of cash market. Presently the available scrips in futures are 89 and in options segment are 62. ? In cash market the profit/loss of the investor depends on the market price of the underlying asset. The investor may incur huge profits or he may incur huge losses. But in derivatives segment the investor enjoys huge profits with limited downside. ? In cash market the investor has to pay the total money, but in derivatives the investor has to pay premiums or margins, which are some percentage of total money. ? Derivatives are mostly used for hedging purpose. ? In derivative segment the profit/loss of the option holder/option writer is purely depended on the fluctuations of the underlying asset. CONCLUSIONS In bullish market the call option writer incurs more losses so the investor is suggested to go for a call option to hold, where as the put option holder suffers in a bullish market, so he is suggested to write a put option. ? In bearish market the call option holder will incur more losses so the investor is suggested to go for a call option to write, where as the put option writer will get more losses, so he is suggested to hold a put option. ? In the above analysis the market price of State Bank of India is having low volatility, so the call option writers enjoy more profits to holders. RECOMMENDATIONS ? The derivative market is newly started in India and it is not known by every investor, so SEBI has to take steps to create awareness among the investors about the derivative segment. In order to increase the derivatives market in India, SEBI should revise some of their regulations like contract size, participation of FII in the derivatives market. ? Contract size should be minimiz ed because small investors cannot afford this much of huge premiums. ? SEBI has to take further steps in the risk management mechanism. ? SEBI has to take measures to use effectively the derivatives segment as a tool of hedging. BIBLIOGRAPHY BIBLIOGRAPHY BOOKS: FUTURES AND OPTIONS – N. D. VOHRA, B. R. BAGRI DERIVATIVES CORE MODULE WORKBOOK – NCFM MATERIAL FUTURES AND OPTIONS – R. MAHAJAN WEBSITES: www. nseindia. com www. equitymaster. com www. peninsularonline. com NEWS EDITIONS: THE ECONOMIC TIMES BUSINESS LINE

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Developing and Managing the Enterprise - Essay Example Falling within the domain of entrepreneurship, small businesses need to have a good financial plan prepared in order to streamline the resources required to start a new business. For this purpose, a good financial plan is the crucial document which needs to be prepared wisely and as far as accurately in order to ensure that those who express their interest to finance the business must have a very clear idea of the resources required to successfully start the new business. This financial plan is being prepared for a small cookie manufacturing business involved in preparing and selling the same to a large chain store through its various stores located all across the state. Before attempting to present the financial plan, it is very important that the financial plan must outline some of the assumptions which would be taken into account while preparing the financial plan so that all the calculations made are justified. Our proposed business is going to work in retail industry. Though the industry for cookies exclusively has not yet developed however since most of the time they are being sold mostly through the retail stores therefore on broader terms, this product belong to retail industry. The recent trends in this business suggest that there is a growing trend in consumers shopping at the retail chain stores. Since these chain stores develop their own brand names as well as customer loyalty therefore the businesses which sale their products to these chain stores also get the exposures to their brands. On the whole industry is very lucrative, have good margins however there is a growing stress being placed on cost reductions as large chain stores like Wal Mart tend to buy at low prices therefore virtually forcing the suppliers to remain within their cost limits. This fact can alone dictate that in future, due to cost reductions, the margins for this business may increase and efficiencies gained. Customer Analysis Customers in this sort of business tend to develop their tastes on some particular brands and they prefer to buy their own brands. Therefore a good customer analysis is very necessary for the success of the business. (www.marketwise.net, 2008)There are various brands available in the market for cookies and each have their own market share however what is important to understand is the fact that most of the transactions are done in cash ensuring that the business have enough liquidity available in their business. This not only ensure that business has its funds but also help the business to have less reliance on the external funds. Further, it is of very important,

The Life of Alexander the Great Essay Example for Free

The Life of Alexander the Great Essay At the age of twenty years old, Alexanders reign of the Macedonian throne began in 336 B.C. following the death of his father, Philip II. Olympias, Alexanders mom, was thought to have assassinated her own husband so that the throne would be prepared for her son. When Alexander became King, he wanted to do great things so that everyone would know that he is King. From the beginning of his reign, he always had a passion for fighting and winning wars. He also noticed that he had many enemies and conspirators and to immediately get them out of the way, he had them all executed. In 335 B.C. he destroyed Thebes, located in upper Egypt, for rebelling against him. In the following year, Alexander had the most amazing military campaign by guiding an army consisting of Greeks and Macedonians fighting against the Persian empire with the goal of taking revenge on Greece in order top fulfill his fathers dream. Throughout his lifetime, he accomplished many things, had incredible defeats, and conquered many countries. By this, he earned his title of the great and was most excellently admired for it. His people saw him as an outstanding motivator, leading men into dangerous, unknown regions, earning much respect and inspiring countless soldiers. Alexander didnt much care about his own safety yet placed all of his concern straight on the goal and the ways in which he would complete it. When in battle, he would like to show his equality between him and his soldiers by riding his war horse on the enemys front line, experiencing the same risks and threats as they were. People started urging him to get married and have a child to carry on his great title but he was too busy with his conquests. He had much hope and faith in his troops and thought out his plans well for only the greatest of successes. He was the ideal of male Greek culture. (pg. 130) Seen as a great hero, he helped his troops along to continuous triumphs. When visiting Gordion in Anatolia, he was given the opportunity to be rewarded the lordship of Asia if only he could make loose an unmoving knot binding the yoke of a chariot. Leaving everyone in awe, he sliced the tough knot with a quick slice of his sword. His never failing most high reputation  among the people never failed and the empire continued to grow. He kept a very close eye on the latest technology and techniques in order to keep up with his war successes. Alexanders unique fighting styles made enemies doubt themselves and their abilities to stand strong against him. He always had his plans all laid out and precise and after conquering Egypt and Persia, his strategy showed to be this : establish colonies of Greeks and Macedonians in conquered territory and keep the traditional administrative system in place. (pg. 131) Alexander began his journey of the founding of new cities by naming the first Alexandria after himself, located in Egypt. His maintaining passion for capture and exploration ruled so greatly in his life that his next goal would be to travel to India. Alexandria the Furthest was established on the way and he ended up settling for an alliance sealed by a marriage to the Bactrian princess Roxanne. (pg. 131) Voyaging into India, seventy days of marching through stormy weather led to the disappearance of the soldiers will to win. In 326 B.C., located on the banks of the Hyphasis River, they forced Alexander to turn back. Finally returning back to Persia, he started on the plans of his next attack without delay. His next target would be the Arabian peninsula followed by all of North Africa. Ruling over the Greeks became less important to him and he decided to restore citizenship within the city-states and he made the declaration that he wanted to be honored as if he were a god. Feeling astonished by this peculiar request, the other leaders complied by sending religious gifts showing their respect. Alexander thought so highly of himself because of all of his great and praiseworthy actions , that he started to believe that he was actually the son of Zeus. He felt that he showed to have godlike power therefore he must be as he proclaims he is. On the somber day of June 10, 323 B.C. , the young Alexander passed away due to extreme drinking and high fever. His future plans were ended by his sudden death not too long after the death of his best friend, Hephaistion . Following Alexanders death, a child was born to him and Roxanne. Despite his short reign, he greatly impacted and benefited the future for geography and many other scientific fields. Altogether, Alexander III immensely  extended the influence of Greek civilization and arranged the way for the empire of the Hellenistic period and the annexation of the Roman Empire.

Health And Safety In A Mechanics And Office Construction Essay

Health And Safety In A Mechanics And Office Construction Essay Occupational Safety and Health is one of the main concerns of employers not only because of the human dimension involved but also because of their legal responsibilities. The objective of the Mauritius Employers Federation in this key area is to create greater awareness among both employers and employees about the need for a safe and healthy work environment. This is essential for the enterprises to be able to play their economic and social role. It cannot be denied that, besides the legal requirements, there is a cost-benefit relationship between OSH, on the one hand, and productivity as well as profitability, on the other. We believe that human and financial losses maybe avoided through professional safety management for the benefit of employees as well as enterprises. Health and Safety in a workshop is very important. If an employee uses equipment, tools and machinery, he should receive safety training. This should ensure that he feels confident in the use of machines and can operate them without having an accident or causing an accident to other people. Before an employee can use equipment and machines or attempt practical work in the workshop the employee must understand basic safety rules. These rules will help keep the employee and others safe in the workshop. In order to assure a safe system of work in the motor vehicle mechanical repair workshop, results from a systematic examination of a task in order to identify all the hazards and assess the risks, and which identifies safe methods of work to ensure that the hazards are eliminated or the remaining risks are minimized. A motor vehicle mechanical repair workshop constitute of several employees and several types of machineries that are being used. In order to recognize the hazards that are present, there are several steps that can be taken into consideration: Check the manufacturers instruction or data sheets for chemicals ( grease, benzene, engine oil, etc ) and equipment ( electrical trolley, towing machines, overhead lifting crane, etc ). Walk around the garage and take notes of things that an employee may thought to pose a risk. Talk to staff/employees to find out what work methods are currently in use, what training they had been given, and any particular requirements. Listen to the employees own concerns about health and safety Go through the accident book In a mechanical workshop, health and safety will deal with biological hazards, chemical hazards, physical hazards and ergonomics. Most accidents in mechanical repair involve trips and falls or poor methods of lifting and handling often resulting in serious injury. Accidents involving vehicles are  frequent and cause serious injuries and deaths . Work on petrol tanks in particular causes serious burns, hundreds of fires and some deaths. Fire and explosion Fires and explosions are the cause of most deaths and property damage in motor vehicle repair workshops. Mostly, they involve the mishandling of petrol when draining fuel tanks and lines but incidents have also occurred during hot work (any process which generates flames, sparks or heat) repairs on diesel tank or the inappropriate use of paints/thinners e.g. to light rubbish fires. Make sure that safe methods of work with flammable materials and high temperatures. Some dos and donts Use a proprietary fuel retriever/adaptor when draining petrol from tanks and lines Store containers of flammable liquids in a safe place Before carrying out any hot work on drums or other containers that may contain vapours such as petrol, diesel, paints, solvents etc carefully consider the risks. Safer options include using cold cutting/repair techniques and replacing rather than repairing. Where hot work on a tank or drum is necessary, reduce the risks by emptying, cleaning, gas-freeing or inerting. Dont drain petrol over or close to pit or drain Dont smoke, weld or carry out other hot work while handling petrol or flammable paints/thinners Dont use petrol/thinners to burn rubbish or unwanted materials Hand-arm vibration Power tools transmit vibration into the operators hands and arms. Hand-arm vibration (HAV) can cause vibration white finger, a permanent and painful numbness and tingling in the hands and arms, also painful joints and muscle weakening. Hand-held portable power tools are used extensively in motor vehicle repair workshop. Purchase tools that have been designed and constructed to reduce the risk of vibration, and are suitable for their intended use. Train workers to use them safely and keep them properly maintained. Plant and equipment Plant and equipment can cause accidents if they are used unsafely or poorly maintained. Vehicles falling/rolling off incorrectly positioned jacks or stands, particularly where they are not chocked, are one of the main causes of fatal accidents in motor vehicle repair. In particular: lifting plant and equipment, including bottle/trolley jacks, axle stands ensure they are regularly serviced, maintained and, where necessary, thoroughly examined use correct pins in axle stands correctly position jacks and axle stands, and use chocks ensure that vehicles are always properly supported Guards and other safety devices must be maintained in good condition and properly maintained. Struck by Accidents are the cause of about 20% of injuries in motor vehicle repair. This category includes being struck by vehicles falling off inspection lifts, materials falling from elevated storage areas or the raised forks on fork lift trucks, by tools and materials ejected from plant and equipment and by movement of vehicles under repair. Tyre removal, replacement and inflation Tyre removal, replacement and inflation should only be tackled by competent staff. The main hazards which can arise include: manual handling injuries, which account for nearly a half of all tyre-related incidents reported; tool-related injuries (which make up a quarter of incidents), particularly from handtools such as tyre levers; and compressed-air accidents e.g. from a ruptured or burst tyre or violent separation of the component parts of the wheel. These accidents tend to result in serious injuries, including fatalities. Safety during tyre inflation Inflated tyres contain a large amount of stored energy, which varies according to the inflation pressure and the surface area of the tyre. If the tyre fails, an explosive force can be released at an angle of up to 45 degrees from the rupture. This has resulted in numerous fatalities. It is crucial that the airline hose between the clip-on chuck and the pressure gauge/control is long enough to allow the operator to stand outside the likely trajectory of any explosion during inflation. This will vary depending on the size of the tyre and its positioning. Car tyres generally contain less energy than truck tyres and their size and profile make them less likely to fail catastrophically. Sensible precautions are still required, but a restraining device such as a safety cage is not normally necessary. Welding fumes Fume from welding, flame cutting and other hot work varies greatly and may cause dryness of the throat, tickling, coughing, tightness of the chest and difficulty in breathing. Long- term changes in the lung are possible. Harmful fumes and gases during welding in motor vehicle repair include those from primer and paint layers, other surface coatings such as underseal, and from lead in car bodies. Use local exhaust ventilation e.g. mobile extraction unit with flexible exhaust hood and trunking, wherever possible and always in confined spaces. Roadside repair and recovery: Road traffic incidents (RTIs) and roadside safety People at work on the roadside either recovering or repairing motor vehicles, including tyre and windscreen replacement, are at risk from other road users. Protection of workers and members of the public from traffic risks on public roads is mostly a matter for road traffic law, which is enforced by the Police and other Agencies. However, existing health and safety legislation requires employers and self-employed persons to protect workers and safeguard others put at risk by their work activities. For example safe systems of work should be devised to ensure the safety of workers and the occupants of vehicles being recovered/repaired vehicles and/or attachments e.g. winches, cranes etc may be subject to health and safety legislation. Conclusion Working in the motor vehicle repais industry exposes people to  potential dangers  and it is the task of the employer (or self-employed person) to identify and minimize those risks. Health and safety in the woodworking industry The woodworking industry has one of the highest accident rates in manufacturing, most of which are caused by contact with moving machinery. Around two-thirds of all accidents occur on just three types of machine: circular saws vertical spindle moulders surface planers Risk management To reduce the chances of an accident occurring, its best to look at what might cause one and then decide what you need to do to stop it happening. The best way to do this is by a risk assessment. Assessment of the workshop Conditions will vary from clean to workshops where machines are buried under dust and off-cuts. The general tidiness is often a good barometer of how well other issues are being managed. Machinery should all be well maintained and have the correct safeguards. It should also only be used by those competent to do so and there should be evidence available to prove this. There should also be good control of health risks from wood dust (asthma, dermatitis), manual handling and noise, etc. Safety topics Working with machinery: Woodworking is the only industry where machinery accidents cause more injuries than slips and trips. Around 25% of these are classed as major injuries. Accidents can be caused by either contact with the moving parts, including tools, or kickbacks of timber and ejected cutters. This happens because of inadequate guarding and poor systems of work, often resulting from insufficient training. Slips, trips and falls account for 19% of accidents in this industry. Vehicles: major injuries to workers and members of the public were caused by vehicles at work. So it is vital to put sensible precautions in place to reduce the risks that vehicles can cause. Fire and explosion: Wood dust is highly flammable and you need to take care to extract it safely and keep it away from sources of ignition. Health topics Health risks in woodworking are not as well known as the safety risks but it is important that they are also included in the risk assessment. Key health concerns in the woodworking industry are: Manual handling Wood dust Noise Hazardous substances Manual handling Most injuries in the woodworking and furniture industry are caused during manual handling activities. There is potential for injury present during: handling of timber and board material machining and assembly handling and storage of the finished product Lifting and handling aids can significantly reduce the risk of injury. Wood dust Wood dust can cause serious health problems. It can cause asthma, which carpenters and joiners   are more like to get. Hardwood dust can cause cancer, particularly of the nose. Settled dust contains the fine particles that are most likely to damage the lungs. Noise Woodworking has some of the noisiest work places in industry. Short exposure to high noise levels can cause temporary hearing loss, but longer exposures can result in permanent damage. Sufferers often do not realise their hearing is being damaged, as hearing loss tends to be gradual. However, some effects such as tinnitus can develop more quickly. Tinnitus can be a permanent ringing or whooshing sound in the ears which can be very distressing, particularly when its quiet, such as when you are trying to go to sleep. Hazardous substances As well as causing asthma, wood dust, sap and the lichens associated with wood can have adverse health effects on the skin, respiratory tract (nose and lungs), eyes as well as the whole body. Some chemicals used in the woodworking industries can have adverse health effects. Particular care should be taken when using dichloromethane (DCM), also known as methylene chloride. This solvent is used to strip paint from wood. As well as being classed as a carcinogen, the vapour can cause drowsiness and headaches. In high concentrations this can lead to unconsciousness and death. Conclusion Key elements to managing woodworking safely include: Risk management: To reduce the chances of an accident occurring, it is best to look at what might cause one and then decide what you need to do to stop it happening. Training and supervision: By law, all workers must receive training and supervision that is appropriate to the equipment they will be using. Workplace management: Paying attention to layout, worker movement and keeping workshops and storage areas tidy can help reduce the risks. Workers themselves should also be encouraged to become involved in health and safety as they are often the best people to understand the risks and help find solutions. Through worker involvement, employees and employers, can act together to reduce accidents and ill health within the workplace. Health and Safety in the office Introduction The modern office environment presents an array of potential hazards that can be avoided by taking simple precautions. Although working in an office has always been considered relatively safe, office workers face occupational hazards that include eye strain, overuse syndrome, headaches, discomfort, trips and falls and manual handling injuries. The ACT Occupational Health and Safety Act 2005, aims to protect the health, safety and welfare of all people in every place of work. Under the Act employers, employees and the self-employed are required to meet certain standards of health, safety and welfare. Employers must ensure the health safety and welfare of their employees. To comply employers must: à ¢Ã¢â€š ¬Ã‚ ¢ Provide or maintain equipment and systems of work that are safe and without risks to health. à ¢Ã¢â€š ¬Ã‚ ¢ Ensure that equipment and substances are used, stored and transported safely and without risks to health. à ¢Ã¢â€š ¬Ã‚ ¢ Provide information, instruction, training and supervision that ensures the health and safety of employees à ¢Ã¢â€š ¬Ã‚ ¢ Maintain their workplace in a safe condition including entrances and exits. à ¢Ã¢â€š ¬Ã‚ ¢ Provide adequate information about any research and tests of substances used at work. Employers must also ensure the health and safety of visitors to the workplace. Employees must: à ¢Ã¢â€š ¬Ã‚ ¢ Cooperate with their employers in their efforts to maintain the required level of health and safety. à ¢Ã¢â€š ¬Ã‚ ¢ Take reasonable care of the health and safety of others. The self-employed must ensure the health and safety of visitors to the workplace who are not their employees. Manufacturers and suppliers of equipment and substances must: à ¢Ã¢â€š ¬Ã‚ ¢ Ensure that their products are safe and not a risk to health when properly used. à ¢Ã¢â€š ¬Ã‚ ¢ Provide clear information about the safe use of their products. à ¢Ã¢â€š ¬Ã‚ ¢ Make available information about research and testing. People in control of workplaces (e.g. building owners who are not the employer) must ensure that the workplace including entrances and exits is safe without risks to health and safety. Reporting and recording workplace injury and dangerous occurrences Employers and persons in control of workplaces must report serious workplace injuries, illness and dangerous occurrences to the ACT Occupational Health and Safety Office on a Injury and Dangerous Occurrence Report Form. Employers are also required to maintain workplace records of employee injuries or illness that result in absences from work of one day or more. Office environment The office environment is a combination of lighting, temperature, humidity and air quality. The office can be a healthy and comfortable place to work if the correct combination of these elements is maintained. Temperature and air conditioning Office temperatures can be localized. A desk situated in direct sunlight will be much warmer than the average temperature in the office and a desk situated directly under an air conditioning vent can be cooler than average. Some older personal computers can generate as much heat as small electric bar heaters raising local temperatures above the room average. This problem can be compounded by the clustering of computers in one particular section of the office. Many of the complaints of discomfort in air-conditioned offices occur in the winter time. The cause of the complaints can be because if the air temperature is about 24 degree Celsius this feels hot to the worker coming into the building from the outside air. The problem can be made worse if the air movement is less. Humidity Humidity refers to the amount of water vapour in the air. The optimum comfort range for relative humidity is 40-60 per cent. Low humidity can cause dryness of the eyes, nose and throat and may also increase the frequency of static electricity shocks. Relative humidity above 80 per cent can be associated with fatigue and reports of stuffiness. If relative humidity is consistently high or low call in an air conditioning expert to conduct a review. Ventilation Ventilation refers to the movement of air and rate of fresh air input. Air movement of less than 0.1 metres per second can lead to stuffy rooms whereas above 0.2 metres per second draughts can be felt. Contaminated air Air contaminants in the office can include bacteria, viruses, mould spores and dusts, solvent vapours or chemicals generated or used in the building. Air conditioning units that do not provide adequate amounts of fresh air can cause high levels of CO2. Stale air due to poor ventilation and excessive heat build-up or humidity can also contribute to air contamination. Appropriate control measures for the reduction of air contamination include: à ¢Ã¢â€š ¬Ã‚ ¢ Effective air filtration. à ¢Ã¢â€š ¬Ã‚ ¢ Ensuring that adequate amounts of fresh air enter the building. à ¢Ã¢â€š ¬Ã‚ ¢ Maintenance of air conditioning units, including regular cleaning. à ¢Ã¢â€š ¬Ã‚ ¢ Preventing the obstruction of vents. à ¢Ã¢â€š ¬Ã‚ ¢ Locating equipment using solvents in areas with substantial air movement and/or installing local exhaust ventilation. Smoking Environmental tobacco smoke is an indoor contaminant and there is growing recognition that non-smokers may suffer adverse health effects through inhaling tobacco smoke. Organisations are increasingly expected to limit passive smoking risks in offices in the interest of their employees and clients. A number of employers have fulfilled their legal obligations to provide a safe and healthy work environment by implementing no-smoking policies in their workplaces. Procedures such as consultation, education programs and the allocation of designated smoking areas are recommended for the development of an effective no-smoking policy. Plants in the office United States NASA studies have shown that plants reduce the levels of toxic substances such as formaldehyde, benzol and carbon monoxide in the air. Lighting The basic requirements for adequate lighting are that the work must be easy to see and the light comfortable to the eyes. Illumination is measured in units of LUX lumens per square metre. Sharp differences in illumination between adjacent areas should be avoided. Ideally the surrounding area should be slightly lower in luminance than the task area itself, except in special cases such as viewing outlines against a luminous background. Light should fall from the side rather than from the front to avoid reflections on the work surface. Glare causes visual discomfort and is usually caused by light sources which are too bright or inadequately shielded. Safety in the office Most office accidents result from slips, trips and falls, lifting objects, punctures or cuts and being caught in or between things. Slips are caused by slippery floors, uncleaned spillages or gripless shoes. Trips occur over objects lying on the ground or jutting out into aisles or poorly maintained floor surfaces. Falls can be from ladders or from standing on chairs to reach an object. Many of these accidents can be avoided by simple planning and good housekeeping: à ¢Ã¢â€š ¬Ã‚ ¢ Traffic ways and aisles should be well lit, and be kept clear of materials, equipment, rubbish and electric leads. à ¢Ã¢â€š ¬Ã‚ ¢ Floors should be level and the use of mats discouraged. Spilled liquids and anything else dropped on the floor should be immediately picked up or cleaned away. à ¢Ã¢â€š ¬Ã‚ ¢ Free standing fittings should be completely stable or secured to the wall or floor. Filing cabinets should be placed so that they do not open into aisles and should never be left with cabinet drawers open. For stability load cabinets starting from the bottom and do not open more than one drawer at a time. à ¢Ã¢â€š ¬Ã‚ ¢ Office machines and equipment should be kept in good working order. Equipment using hand-fed processes such as electric staplers and paper guillotines should be guarded and staff trained in their proper use. à ¢Ã¢â€š ¬Ã‚ ¢ Many pieces of equipment using electricity can mean trailing cables, overloaded circuits, broken plugs and sockets. Ensure that these dangers are seen to by qualified personnel. Escalators and moving walkways Escalators and moving walkways should function safely, be equipped with any necessary safety devices, and be fitted with one or more emergency stop controls which are easily identifiable and readily accessible. Manual handling Manual handling is a term used to describe everyday type activities such as carrying, stacking, pushing, pulling, rolling, sliding, lifting or lowering loads. For office workers this can include tasks such as moving boxes of stores, filing, getting equipment from cupboards and filling the photocopying machine with paper. Injuries that are a result of a manual handling incident include twisted ankles, sprains and strains, torn ligaments or broken bones. Many risks arising from manual handling can be controlled by quite simple solutions. Reducing manual handling injuries Stage 1: Risk identification Where are the manual handling injuries happening in the office? à ¢Ã¢â€š ¬Ã‚ ¢ Look at injury records. à ¢Ã¢â€š ¬Ã‚ ¢ Talk to employees and the workplace OHS committee. à ¢Ã¢â€š ¬Ã‚ ¢ Watch the work in progress. Stage 2: Risk assessment What is causing these manual handling injuries? Look at: à ¢Ã¢â€š ¬Ã‚ ¢ Force applied à ¢Ã¢â€š ¬Ã‚ ¢ Actions and movements à ¢Ã¢â€š ¬Ã‚ ¢ Range of weights à ¢Ã¢â€š ¬Ã‚ ¢ How often, and for how long the job is done à ¢Ã¢â€š ¬Ã‚ ¢ Where the load is positioned and how far it has to be moved à ¢Ã¢â€š ¬Ã‚ ¢ Availability of mechanical aids à ¢Ã¢â€š ¬Ã‚ ¢ Layout and condition of the work environment à ¢Ã¢â€š ¬Ã‚ ¢ Work organization à ¢Ã¢â€š ¬Ã‚ ¢ Position of the body while working à ¢Ã¢â€š ¬Ã‚ ¢ Analysis of injury statistics à ¢Ã¢â€š ¬Ã‚ ¢ Age of the workers à ¢Ã¢â€š ¬Ã‚ ¢ Skill and experience of the workers à ¢Ã¢â€š ¬Ã‚ ¢ Nature of the object handled à ¢Ã¢â€š ¬Ã‚ ¢ Any other factor considered relevant. Stage 3: Risk control What changes can be made to prevent these manual handlinginjuries? à ¢Ã¢â€š ¬Ã‚ ¢ Redesign the job à ¢Ã¢â€š ¬Ã‚ ¢ Provide mechanical handling equipment à ¢Ã¢â€š ¬Ã‚ ¢ Provide training in manual handling skills Once this process has occurred it is important to evaluate the effectiveness of the changes that have been made. Any evaluation must assess whether the changes are used correctly, help reduce manual handling injuries and have not created new problems. Chairs and posture checklist for keyboard workers Well adjusted chairs improve body position and blood circulation, reduce muscular effort and decrease pressure on the workers back. Chairs should swivel, have five wheels for stability, breathable fabric on the seat, a rounded front edge and have adjustable seat height and backrest for lumbar support. Lighting for VDUs Place VDUs to the side of the light source(s), not directly underneath. Try to site desks between rows of lights. If the lighting is fluorescent strip lighting, the sides of the desks should be parallel with the lights. Try not to put the screen near a window. If it is unavoidable ensure that neither the screen nor the operator faces the window. If the VDU is well away from windows, there are no other sources of bright light and prolonged desk-work is the norm, use a low level of service. Using a mouse A well designed mouse should not cause undue pressure on the wrist and forearm muscles. A large bulky mouse may keep the wrist continuously bent at an uncomfortable angle. Pressure can be reduced by releasing the mouse at frequent intervals, by selecting a slim-line, low-profile mouse and by using the mouse at a comfortable distance from the body. Rest breaks and keyboard work Frequent short breaks are most effective in relieving the strain associated with keyboard work. For reasonably sustained keying activity a break should be taken for a few minutes every half hour. During this break operators should walk around and perform whatever movement relieves the feeling of muscle fatigue. Movements that are a natural response to fatigued muscles such as shrugging the shoulders are generally the most effective in dealing with the fatigue. A particularly useful method of relieving muscle fatigue is to occasionally alter posture. That is, to change from the recommended posture for short duration. Some chairs have a forward tilt control that allows the worker to sit forward which can sometimes help to reduce fatigue to the muscles of the forearm, neck and shoulders. Eye strain Working with VDUs can produce tired and sore eyes and eye strain. To reduce strain take short rests and look into the middle distance or if necessary close the eyes and cover them with the hands without pressing and breathe deeply eight or nine times. Muscle care and preparation The following exercise should be done before commencing work and after lunch breaks. However it is important to: à ¢Ã¢â€š ¬Ã‚ ¢ Never stretch to the point where pain is experienced. à ¢Ã¢â€š ¬Ã‚ ¢ Refrain from doing these exercises if you have a medical condition that could be made worse by stretching. Welfare Sanitary conveniences and washing facilities Suitable and sufficient sanitary conveniences and washing facilities should be provided at readily accessible places. They and the rooms containing them should be kept clean and be adequately ventilated and lit. Washing facilities should have running hot and cold or warm water, soap and clean towels or other means of cleaning or drying. If required by the type of work, showers should also be provided. Men and women should have separate facilities unless each facility is in a separate room with a lockable door and is for use by only one person at a time. Drinking water An adequate supply of high-quality drinking water, with an upward drinking jet or suitable cups, should be provided. Water should only be provided in refillable enclosed containers where it cannot be obtained directly from a mains supply. The containers should be refilled at least daily (unless they are chilled water dispensers where the containers are returned to the supplier for refilling). Bottled water/water dispensing systems may still be provided as a secondary source of drinking water. Drinking water does not have to be marked unless there is a significant risk of people drinking non-drinking water. Accommodation for clothing and facilities for changing Adequate, suitable and secure space should be provided to store workers own clothing and special clothing. As far as is reasonably practicable the facilities should allow for drying clothing. Changing facilities should also be provided for workers who change into special work clothing. The facilities should be readily accessible from workrooms and washing and eating facilities, and should ensure the privacy of the user, be of sufficient capacity, and be provided with seating. Facilities for rest and to eat meals Suitable and sufficient, readily accessible rest facilities should be provided. Seats should be provided for workers to use during breaks. These should be in a place where personal protective equipment need not be worn. Rest areas or rooms should be large enough and have sufficient seats with backrests and tables for the number of workers likely to use them at any one time, including suitable access and seating which is adequate for the number of disabled people at work. Where workers regularly eat meals at work, suitable and sufficient facilities should be provided for the purpose. Such facilities should also be provided where food would otherwise be likely to be contaminated. Work areas can be counted as rest areas and as eating facilities, provided they are adequately clean and there is a suitable surface on which to place food. Where provided, eating facilities should include a facility for preparing or obtaining a hot drink. Where hot food cannot be obtained in or reasonably near to the workplace, workers may need to be provided with a means for heating their own food (eg microwave oven). Canteens or restaurants may be used as rest facilities provided there is no obligation to purchase food. Suitable rest facilities should be provided for pregnant women and nursing mothers. They should be near to sanitary facilities and, where necessary, include the facility to lie down.