Types Of Financial Instruments Research Articles

A STUDY ON PERFORMANCE EVALUATION OF 5 EQUITY GROWTH MUTUAL FUND SCHEMES IN INDIA

A mutual fund, which is another name for an investing business, is a type of financial instrument that pools the capital of multiple participants and uses it to purchase money market instruments and government securities. To put it simply, the management of the fund uses the funds raised to buy bonds and equities. The purchase of securities is known as the portfolio of the fund. Additionally, the investors split the revenue from this joint investment after subtracting any necessary taxes and levies. NAV is used to compute these costs and levies (Net Asset Value). The purpose of this study is to examine the performance of a five selective Indian mutual fund schemes during a three-year period from 2020 to 2023 using their daily Net Asset Value (NAV). The selected mutual considered for the study are private sector equity growth mutual fund schemes. The funds' performance is evaluated using the Sharpe index, Treynor index, and Jensen alpha, and the results will help investors make smarter investing decisions. The study aims to study the best performer among these 5 mutual funds i.e., HDFC, ICICI, AXIS, KVB and KOTAK MAHINDRA based on the study period. NAV = Value of Securities – Liabilities / No. of units outstanding shares) Keywords: Equity Growth Mutual Fund, performance, risk and return, banks in the private sector, Jenson's, Treynor's, and Sharpe's ratios.

Loan Schemes Granted for Students as a European Union Financial Instrument for Education Inclusion in Its Member States

Abstract European Union financial instruments and more specifically loan schemes are tools that have been developed and used more and more in the world we are leaving in due to their availability as well as their accessibility for the European Union member states. Due to the significant implicants in education, these loan schemes became a foundation stone in the development of education inclusion. The aim of this paper is to show the way these loan schemes have been used, the scheme of these programs, the impact they had on the beneficiaries and on the education, the challenges and possible lessons for helping in the creation of the future funding programs. In doing a better understanding and analysis, I have used a multiple case analysis representing a qualitative method that focuses on analyzing of three different case studies on three different countries that have been used loan schemes as financial instruments for giving access to higher education programs for students that were not able to and facilitate education inclusion in their state. The main findings suggests that these loan funds have a positive impact on the evolution of education inclusion, students being open to apply for them even if in some cases, the understanding of the mechanism behind it was a little bit difficult in the beginning. Overall, based on the case studies and on the number of the applicants that took advantage of these funding programs, it can be concluded that these types of financial instruments must continue to be used in the future and extended in more regions no matter of their development status.

THE ROLE OF CRYPTOCURRENCY IN THE DIGITAL ECONOMY

Goal The article examines the concept of "cryptocurrency", substantiates the popularity of this new type of financial instrument in the economic space, highlights the main features of cryptocurrency as a type of virtual money and its impact on the economic system. Methodology. The following key features of cryptocurrency are highlighted: payment for goods and services; minimum level of impossibility of abduction; payments, fast and direct transactions; investment asset; business development on cryptocurrency, the functional roles of cryptocurrency in the digital economy are considered, trends and prospects for their development are investigated. Results.The main types of the most popular cryptocurrencies today have been considered, and their common features have been unified. It has been established that the most widespread cryptocurrency is Bitcoin. Market capitalization of cryptocurrencies provided. Scientific novently. An overview of crypto-spot exchanges is presented. The legal status of cryptocurrency was investigated, and it was found that more and more countries are granting cryptocurrency the status of a legal and legal means of payment, in some places equating it to electronic money. Practical significance. It is noted that cryptocurrency has both positive features and disadvantages, the main of which is the increased risk of fraud and fraud using digital currency.

Особливості блокчейн-технології та можливості її застосування в аудиторській діяльності

The article examines the history of the emergence of blockchain technology in order to understand its widespread implementation in many areas of modern human activity. It is defined that blockchain technology can be used to create an immutable or perpetual ledger for tracking orders, payments, invoices and other transactions. Thus, the researched technology is suitable for use in the field of finance and accounting. At its core, blockchain represents a type of distributed ledger technology, which is based on a token as an accounting object. This opens up opportunities for faster and more efficient financial transactions, as well as for the creation of new types of financial instruments. As a result of the study, the features of this innovative technology are revealed, namely: decentralization and immutability of data. The widespread use of blockchain technology in various fields has not bypassed auditing. In accounting and auditing, blockchain can serve as the basis for decentralized accounting systems, where every transaction is recorded and stored in on-chain blocks, ensuring that they are immutable and consistent. This can facilitate auditing, promote accounting accuracy, and provide greater transparency in financial operations. It is substantiated that the introduction of blockchain technology by auditing entities has a number of advantages and risks, which are described in the presented methodological study. Prospects for further research in this direction are to determine the efficiency of the use of the latest information technologies in the work of auditing entities and assess the potential risks that can arise in the auditing process.

Research on the Process of the Formation of an Optimal Investment Portfolio

In the financial market, there are different types of financial instruments, such as equities, bonds, and mutual funds, and investors can build an investment portfolio through their buying and selling activity in the market. Limited-experienced individual investors are often attracted to stocks or bonds with high returns when trading in the financial market and building an investment portfolio. This could make them underestimate the adverse impact brought by investment risks on their expected returns for the portfolio. An optimal investment portfolio should be aimed at with a step-by-step process that considers risk tolerance, portfolio selection, and the monitoring of the portfolio after it has been formed. This theoretical process would first consider the way in which individual investors could assess the risk involved in the portfolio. The beta coefficient is one of the indicators and it can be estimated via the capital asset pricing model (CAPM). Then, a well-diversified portfolio would be favoured, not only across different financial instruments, but also across different industries, and the minimum desired number of instruments included in the portfolio is 30. Rebalancing portfolios is a crucial step in keeping the original structure, and ilinskijs criterion helps individual investors to rebalance more efficiently. Although this process helps investors in building investment portfolios, it should include more areas of concern about investors own interests and the plausibility should be further tested.

ФОРМУВАННЯ ПОРТФЕЛЯ ФІНАНСОВИХ ПЛАТІЖНИХ ЗОБОВ’ЯЗАНЬ, ЗАХИЩЕНОГО ВІД СИСТЕМАТИЧНИХ РИЗИКІВ

Developing a model for studying banking operations related to financial risk seems to be very promising. Banks with heterogeneous fundamental funds often face a potential outflow of their creditors. The ability to affect a particular bank depends on the intermediate liquid value of its assets, whereas the latter value endogenously depends on the status of other banks in the asset market. Mathematical modeling of economic risks forms an idea of the peculiarities of modern economic risks, including financial ones. The study of various ECONOMIC-MATHEMATICAL MODELING Issue IІ (90), 2023 119 aspects of financial risk is one of the fundamental concepts of modern economic theory and management, as well as is increasingly being applied in practice in all areas of economic activity. Obviously, it is not necessary to use experience and intuition in economic activity. However, it is essential to possess the information about the causes of risk situations and to carry out qualitative and quantitative risk analysis. The purpose of the article is to develop a mathematical model of immunizing a portfolio of financial transactions and to study the immunization of a portfolio of financial payment obligations regarding the risk of changes in market interest rates. The article identifies the basic typical models of investment portfolios and studies the methods of portfolio optimization, using different types of financial instruments. Initially, it is necessary to study the net present value of payments (NVP), for which the NVP formula is introduced. Next, the main factor of change in the yield curve should be taken into account - a parallel shift by the value of h (NPV(h)) so that NPV(h)- NPV(0) is minimal, using a more complex deformation of the yield curve. To mitigate this risk, it is important to apply factor immunization, however, with a due regard to the three factors that describe almost all changes in structural interest rates. All studies are formulated in the form optimization problems. To protect a portfolio from market risk, its structure needs to be rebuilt. Therefore, the possible volatility and liquidity risks for the existing portfolio of financial liabilities have to be taken into consideration as well.

The Impact of Off-balance Sheet Financing on Corporate Fraud

Off-Balance Sheet Financing (OBSF) is an accounting practice in which companies record certain assets or liabilities in a way that prevents them from appearing on the balance sheet. This procedure is used to keep the debt-to-equity ratio and leverage ratios low, especially if adding large expenses would overturn negative debt covenants. Examples of off-balance sheet financing include joint ventures, research and development partnerships (R&D), and operating leases. Companies sometimes take a creative approach when making large purchases. Holders of large debts often do whatever it takes to ensure that their leverage ratios do not lead to a breach of their agreements with lenders. Companies are also aware that a healthier-looking balance sheet is likely to attract more investors, and that banks tend to charge highly leveraged companies to borrow money since they are more prone to default. If a company takes on financing services, it must show these in its balance sheet. These include loans and other types of financial instruments. An off-balance sheet financing allows a company to get the financing without having to report it in the financial statement. Although it is a smart way of management to manage the company's finances, off balance sheet financing can sometimes create doubts about the company's operations. This type of accounting procedure is used to maintain the company's financial position and keep the investors' faith. The goal of this process is to show a low debt equity ratio to keep the investors' confidence. There are many ways to enter into a sheet financing agreement. It can be done through a partnership, a joint venture, an investment in an associate company, or leasing.

Bitcoin: A life in crises.

In this study, we investigate the BTC price time-series (17 August 2010-27 June 2021) and show that the 2017 pricing episode is not unique. We describe at least ten new events, which occurred since 2010-2011 and span more than five orders of price magnitudes ($US 1 -$US 60k). We find that those events have a similar duration of approx. 50-100 days. Although we are not able to predict times of a price peak, we however succeed to approximate the BTC price evolution using a function that is similar to a Fibonacci sequence. Finally, we complete a comparison with other types of financial instruments (equities, currencies, gold) which suggests that BTC may be classified as an illiquid asset.

Tax Aspects of REMIC Residual Interests

With the creation in 1986 of the "real estate mortgage investment conduit" (REMIC), there came into existence a new type of financial instrument, the REMIC residual interest, the economics and tax treatment of which are quite unlike those of any other financial instrument. The REMIC residual interest is a unique creature of the tax laws and exists only because the tax laws say it must, and not because there is a particular demand for such instruments in the marketplace. Moreover, residual interests are intensely regulated by arcane and complicated tax rules that are designed principally to maximize a holder's tax liability. Yet, REMIC residual interests are a staple of the mortgage-backed securities marketplace today-a marketplace that has become gargantuan in recent years. The raw number of residual interests and their prevalence in the portfolios of sophisticated investors and securities dealers can only increase steadily as more and more mortgages are pooled into REMICs. Accordingly, it is appropriate to examine the complex tax rules associated with residual interests, particularly since these rules are relevant not only to the holder of a residual interest, but also to the REMIC itself, and therefore indirectly to the holders of regular interests in the REMIC.This Article provides a comprehensive analysis of the tax issues associated with creating, issuing, holding and trading REMIC residual interests. This far ranging inquiry is necessary because REMIC residual interests are a novelty and do not fit within, nor are they readily analogized to, normal tax concepts and rules that apply to other financial instruments. For example, the tax laws have spent many decades working out the appropriate treatment of debt and equity, and how to distinguish between the two. And in recent years the tax laws have become increasingly adept at untangling the tax treatment of various derivative financial instruments, such as notional principal contracts. Yet, the REMIC residual interest is neither debt, equity, option nor notional principal contract-although it has points of similarity to each of these-and consequently it has the fortune or misfortune of entering the marketplace with no applicable tax common law to help establish the appropriate tax treatment. As a result, although a handful of specific provisions in the REMIC rules resolve a great many issues, the tax treatment of residual interests is unsettled in a number of important respects.This Article seeks to catalogue the tax aspects of residual interests and, in doing so, to identify the open issues, address the relevant tax policy considerations, and suggest possible solutions.

ДИНАМІЧНА ВЗАЄМОЗАЛЕЖНІСТЬ НА КРИПТОВАЛЮТНИХ ТА ФОНДОВИХ РИНКАХ: МНОЖИННА ВЕЙВЛЕТ-КОРЕЛЯЦІЯ

Modern conditions for the development of international market relations and participation in world globalization processes necessitate strengthening the monetary and credit system, increasing the effectiveness of the use of monetary policy tools to enhance their influence on restructuring and further development of the economy. In the rapid advance of information technologies, new economic management tools, including electronic money, appear every day. The emergence of new types of financial instruments, such as cryptocurrencies, is due to globalization in the financial market. The work aims to identify and model the mutual influence of indicators’ returns, comparing the dynamic characteristics of the cryptocurrency market with some traditional and widely used stock indices, taking into account other factors, for example, the global crisis situation. It was established that three powerful stock indices (S&P 500, Dow Jones, NASDAQ Composite) show a low level of interdependence of volatility evolutions with cryptocurrencies. However, the WLMC construction proved Bitcoin’s dependence on leading stock indices on all scales during 2020– 2021. Also, WLMC’s high performance on the first 100-day period (January–April 2020) and a two-week scale during November 2021 – January 2022 are in the combination of cryptocurrencies with the S&P 500 stock index. The created VAR models demonstrate positive interdependence between Bitcoin and the S&P 500. The study of the ensemble of time series showed that at times of disturbances, resonant phenomena manifest in the behavior of returns of stock indices and cryptocurrencies. The leading role is played by the S&P 500 stock index, while the similar behavior of Bitcoin is manifested indirectly.

From the Chair

From the Chair

Класифікація фінансових інструментів: обліково-контрольний аспект

The purpose of the article is to supplement the classification of financial instruments for accounting goals and its expert verification. Research methods. The following set of methods was used in the research process: dialectical - when learning the substantive features and essence of financial instruments; analysis and synthesis - in the study of the completeness of the classification of their species; induction and deduction - to deepen and supplement the classification features of financial instruments; monographic - in the systematization of knowledge about the types of financial instruments, their identification as objects of accounting and reporting; systematization - when filling the identified gaps in the grouping of financial instruments and building a comprehensive classification for accounting purposes and its expert verification. Research results. A significant number of classification options for the latter have been identified by studying specific financial instruments and the available methods of grouping them. It is established that not all existing classification features should be used in accounting, as the current arsenal of accounts and reporting forms does not allow recording such details. At the same time, some of the most common ways of grouping financial instruments leave some of their types out of the classification groups some of their classes. To eliminate the identified shortcomings, it is proposed to supplement the classification of financial instruments with new features "according to the company's profile" and "according to the regularity of transactions with financial instruments." Scientific novelty. The classification of financial instruments has been improved, which differs from the well-known ones by highlighting new classification features "by the profile of the enterprise" and "by the frequency of transactions with financial instruments", which is based on an in-depth analysis of the features of disclosing information about them in the reporting and allows you to identify potentially risky accounting transactions that require expert verification. Practical significance. It consists of identifying incomplete classification groups of financial instruments, their supplementation, and the formation of new ones, which together aim to build a generalized accounting and reporting vision of financial assets, financial liabilities, and equity instruments to cover the accounting policies fully. Figs.: 1. Refs.: 17.

An Innovative Conceptual Model to Structure Financing Package of Infrastructure Projects

Understanding the correct way to determine the financing package for infrastructure projects, identifying proper processes, resources, techniques, and instruments to realize successful financing approaches, and private sector participation in providing development infrastructures are irrefutable. The main purpose of this study is to present a comprehensive model covering these complex issues. To this end, using the library studies, receiving expert opinion, and recognizing international financing processes, information was gathered on this subject; therefore, in this paper, the model of designing financing package for infrastructure projects is processed and identified, and designing the financing structure is closely related to the ownership structure of the project and its guaranteed package. These will change in a repeatable process until the end of the preparation phase and sometimes in project steps. The ownership of the infrastructure projects is determined by this repeatable process, which defines initial sponsors, costs, and benefits for partners, types of financial instruments, and techniques and evaluates risks and capital structure. In this paper, we suggest a model to help practitioners more effectively and systematically finance infrastructures. The development of guidelines and information resources in this field is one of the effective measures to build capacity and eliminate possible ambiguities and misunderstandings about public-private partnership.

Transportation Infrastructure Project Financing; Highways Capital Structure Design Techniques

Whether a private bidder can win a concession depends largely on advanced financial engineering techniques, numerous methods were developed. Meeting large infrastructure needs including its proper maintenance and operation is and will remain a major challenge for the all-around the in the coming years requiring targeted innovative financing mechanisms. Even though it is recognized that there are three types of financial instruments, equity, mezzanine finance and debt in funding an infrastructure project, the status quo is that previous capital optimization methods did not consider mezzanine finance or simply categorized it into debt-like or equity-like instruments. The global infrastructure sector is witnessing a steady growth of private equity investment in mezzanine instruments. The frequent usage of the contingent claim embedded in mezzanine financing makes the traditional model for capital structure optimization invalid. This study presents a more advanced method to optimize capital structure in infrastructure financing. This easily implemented method is based on a two-stage procedure: I) identification of optimal stopping time for convertible securities, and II) capital structure optimization by a conventional model. The quantitative optimization model can be easily generalized. The global infrastructure sector is witnessing the continued growth of a private equity fund of mezzanine tools. Repeated use of potential claims embedded in mezzanine financing has invalidated the traditional model for optimizing capital structure.

Цільові облігації: ризики та доцільність застосування

The conditions for attracting and the availability of capital to finance construction are important for the economic development of Ukraine. The article considers how the institutional environment and variability of legislation, in particular, in the investment and fiscal spheres cause developers and participants in capital markets to constantly search for the most optimal in terms of taxation and least risky instruments for financing construction, one of which is corporate target bonds. To assess the risks of using target bonds in construction financing, the evolution of the legal form of issuance, circulation and redemption of target corporate bonds in Ukraine was considered, which was too late to avoid large-scale defaults and too fragmented to properly protect investors’ rights. The rudimentary nature of target real estate bonds in Ukraine, their inconsistency with the EU experience in terms of regulation and practice of capital and real estate markets. The functionality of the existing publicly available databases on the stock market of Ukraine for aggregation and analysis of information on different types of financial instruments, including target corporate bonds were confirmed. Investment and fiscal risks of using target corporate bonds for real estate financing are studied. It is proved that the scheme of financing construction through the issuance of target corporate bonds has significant risks for investors and developers. The contradictory nature of the implementation of EU legal norms on the classification of financial instruments and the lack of adequate mechanisms to protect investors in target corporate bonds are substantiated. To deepen the analytical justification of the results in further research, it is advisable to pay special attention to a comprehensive study of the advantages and disadvantages of existing and future models of construction financing in regularly updated legislation, in particular in the field of taxation and capital markets regulation.

Analysing the Sway of Cash Instruments in the Indian Financial Market Context

There are basically four types of financial instruments viz. a bank deposit, a bill of exchange, a bond, and equity. As a result of a steady stream of financial innovations in today’s time, the market landscape is far less sparse-and far more complex to evaluate. Financial instruments are termed as the financial products which are tradable as packages of capital, each having their own unique characteristics and structure. The wide collection of financial instruments in today's marketplace allows for the efficient flow of capital amongst the world's investors. Financial instruments are legal documents that embody monetary value. There are a number of different types of documents that are properly identified as a financial instrument. There are different types of financial instrument, like cash instruments or derivative instruments.

ДЕРЖАВНЕ РЕГУЛЮВАННЯ БІРЖОВОГО РИНКУ КАПІТАЛУ В УКРАЇНІ

In modern conditions a developed stock market is a necessary element of the country's economy effective functioning as it establishes legal and economic relations between businesses that need financial resources and individuals who can provide them. The level of business activity in this sector determines the state of economic development of the country. Exchange activity in a market economy requires government regulation in order to ensure the efficiency, balance and stability of the exchange market. The purpose of the article is to analyze the state regulation of the stock market in Ukraine. The article analyzes the dynamics of trading on the stock market of Ukraine, identifies problems with its operation. The main models of state regulation of the financial services market are considered, namely: monoregulatory and polyregulatory. It is concluded that there is a multi-regulatory model of organized markets in Ukraine, as regulatory functions are assigned to the National Commission on Securities and Stock Market and the National Bank of Ukraine on domestic government bonds, money market derivative contracts, money market instruments. The state regulation of the stock market in Ukraine in accordance with the Law of Ukraine "On Amendments to Certain Legislative Acts of Ukraine on Simplification of Attracting Investments and Introduction of New Financial Instruments" of June 19, 2020 is studied. which includes capital markets and commodity markets; improving the organization of the depository and clearing system; introduction of a trade repository and a liquidation of the netting mechanism; enshrining in law the differences between qualified and unqualified investors; introduction of green bonds as a new type of financial instruments. It is concluded that the adoption of the above law is an important step in the development of the stock market, as this law amends the law "On Securities and Stock Market" and establishes uniform rules for all exchange traders, defines the market regulator and circulation mechanism. financial instruments, radically changes the structure of the capital market and adapts Ukrainian legislation to the norms of the European Union in the field of financial services, bringing Ukraine closer to the global financial space.

OPTION VALUE CALCULATION AFFECTED COMPONENTS

As the subprime credit crisis has attracted attention to financial derivative instruments, more frequently arises questions about fairvalue calculations. Over the time, different models had been introduced. All of those models take into account factors affectingprices. Mostly, factors used in calculations on the same type of financial instruments are approximately the same. Therefore questionarises, which factor affects price more and which less, with no matter which model would be used for fair value calculations. One offinancial derivative instrument types is options. Options are agreements, which give to option buyer rights to buy or sell underlyingasset. While the seller or writer of option has obligation to buy or sell underlying asset. This research aims to explore the impact offactors on option fair value calculations and evaluate most important ones from those, which could be chosen by option buyer orseller. To reach the aim of research following tasks are developed: 1) review of fair value calculation models; 2) compare results ofusage of different models and changes in affecting factors; 3) highlight differences between option price affecting factors, modelsused in calculations and results provided. Research includes literature review and analysis of option pricing results. Option pricecalculations are based on historical option prices, using black-Scholes and Binomial option pricing models. KEYWORDS: options, fair value models, strike price, exercise date. DOI: http://dx.doi.org/ 10.15181/rfds.v11i3.617

Legal regulation of new types of financial instruments on financial markets of Ukraine and the EU: new approaches and trending aspects

Legal regulation of new types of financial instruments on financial markets of Ukraine and the EU: new approaches and trending aspects

ФАКТОРИ ІНВЕСТИЦІЙНОЇ СТРАТЕГІЇ В СИСТЕМІ ПІДВИЩЕННЯ КОНКУРЕНТОСПРОМОЖНОСТІ ПІДПРИЄМСТВА

In the modern turbulent terms of manage enterprises constantly take part in competitive activity. For that, not to become an outsider at the market any enterprise must be competitive and begin to think of by strategy of the development. The aim of this work is research of basic factors of investment strategy enterprises that assist the increase of competitiveness of enterprise directly. On such conditions acquire actuality there is forming of investment strategy of enterprise and increase of competitiveness of enterprise through expansion of volumes of investment activity, use of new various types of financial instruments and non-material assets. The article analyzes the investment strategy as an important component of increasing the competitiveness of the enterprise. The investment attractiveness, which is the basis for creating an investment strategy, is characterized, its factors that influence the development of investment attractiveness are considered. The work is based on the consideration of the investment strategy of the enterprise as the development of long-term development goals of the company. The necessity of combining the implementation of the investment strategy with increasing the competitiveness of the enterprise is substantiated. An investment attractiveness that is basis for creation of investment strategy is described, her factors that influence for development of investment strategy are considered. In basis of work consideration of investment strategy of enterprise is stopped up as development of long-term aims of development of enterprise in relation to the increase of competitiveness. The synergy of factors of investment strategy is reasonable and by the increase of competitiveness of enterprise. It follows to take to the number of factors of direct influence – financially-economic to that the elements of control system (structure, methods, aims et al) must be included first of all. With the aim of increase of competitiveness of enterprise a management must direct investments in an innovation. The most modern digital technologies introduction of that needs considerable investments are described to basis, but the increase of competitiveness of enterprise will promote afterwards.