- DON’T give out your credit card number(s) online unless the site is a secure and reputable site. Sometimes a tiny icon of a padlock appears to symbolise a higher level of security to transmit data. This icon is not a guarantee of a secure site, but might provide you some assurance.
- Don’t trust a site just because it claims to be secure.
- Make sure you are purchasing merchandise from a reputable source.
- Make sure the transaction is secure when you electronically send your credit card number.
- Do your homework on the individual or company to ensure that they are genuine.
- If you are making online purchase from a previously unknown seller, try to obtain the physical address rather than a post office box and a phone number. Call the seller to see if the number is correct and working. Do not buy from sellers who won’t provide you with this type of information.
- Don’t judge a person/company by their website.
- Be cautious when responding to special offers (especially through unsolicited e-mail).
- Be cautious when dealing with individuals/companies from outside your own country.
- If anything looks suspicious or if you lose your credit card(s) contact the card issuer immediately and deactivate the card.
What are derivatives? Derivatives are financial instruments, which as the name suggests, derive their value from another asset — called the underlying. What are the typical underlying assets? Any asset, whose price is dynamic, probably has a derivative contract today. The most popular ones being stocks, indices, precious metals, commodities, agro products, currencies, etc. Why were they invented? In an increasingly dynamic world, prices of virtually all assets keep changing, thereby exposing participants to price risks. Hence, derivatives were invented to negate these price fluctuations. For example, a wheat farmer expects to sell his crop at the current price of Rs 10/kg and make profits of Rs 2/kg. But, by the time his crop is ready, the price of wheat may have gone down to Rs 5/kg, making him sell his crop at a loss of Rs 3/kg. In order to avoid this, he may enter into a forward contract, agreeing to sell wheat at Rs 10/ kg, right at the outset. So, even if the price of wheat falls ...
