Weather Derivatives in India

go Derivatives A Report submitted in partial fulfillment of the requirements of the course Derivatives Management Under the Guidance of Dr. Alok Pandey [pic] PGDM (International Business) 2007-09 Animesh Verma (07IB-007) |Prateek Sinha (07IB-038)| Sudarshan Bhutra (07IB-055) CONTENTS INTRODUCTION3 brave out Measures4 HDD and CDD4 Weather Derivatives structure5 C every and Put Options6 Weather Swaps7 Collars (Fences)7 PRICING OF WEATHER DERIVATIVES9 price Models for Weather Derivatives9 1.Black-Scholes and live on derivatives.12 2.Simulations based on historical entropy or BURN ANALYSIS14 3.Monte Carlo Based Simulations15 Weather Derivatives in India16 Hedging Weather Risk Using Weather Derivatives23 INTRODUCTION The weather derivates market started in 1997 in the US as the first transaction in this regard was recorded in that location but now this weather derivatives market has spread to all major markets. According to US energy market, US$ 1 trillion of the US economy is affected by the weather risk. By the year 2000 about US$ 3.5 billion cost of weather derivates were traded in the US.

There are 4 major players in the weather derivates market : MARKET MAKERS BROKERS INSURANCE AND REINSURANCE COMPANIES. leftover USERS such as Gas and power marketers and utilities etc. Derivative is a contract or a security whose value or payoff derives from the price of an underlying asset. Derivatives help an investor to control the risks of changes in the prices of the underlying asset. For eg. An exporter who receives his payments in foreign up-to-dateness is exposed to currency risk ie the risk of home currency appreciating with applaud to the foreign currency. When Rupee started appreciating against the US Dollar the textile exporters and IT companies faces loaded down(p) losses if they had not hedged their positions. Weather Measures Weather measures are... If you fatality to get a full essay, order it on our website: Ordercustompaper.com

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