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Working Papers | 1991

Mastershares: Market Prices Divorced From Fundamentals

Samir K. Barua and Jayanth R. Varma

The shares of a closed-end Mutual Fund may be regarded as derived securities because their value depends entirely on the prices of securities that comprise the fund portfolio. Therefore, the Net Asset Value (NAV) of these shares, after adjustments for winding up costs, can be regarded as their fundamental value. In an efficient market, the prices of these shares would move in line with the changes in their NAV. This paper examines the relationship between the price and the NAV of Mastershares, the first closed-end fund in India. The investigations revealed that there is excessive volatility in prices, not justified by the fluctuations in the NAV. The price also show a mean reverting behaviour. These observations are in line with recent works on irrationality in pricing of securities and emphasize the doubts raised about efficacy of standard test for market efficiency.

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Working Papers | 1991

Option Trading: A Primer and a Proposal

Gupta Ramesh

The option industry has witnessed explosive growth since 1973 when the first organized option exchange opened in Chicago. Moreover, this growth is continuing into the 1990s as entirely new types of options are created and as more of the traditional options on securities are listed and traded. Options on commodities, options on financial indices and options on future contracts are all exciting new products. Understanding these new products well enough to sell them has been straining the capacity of the world security industry. At present, instruments prevalent in India are meant primarily to raise resources from public for corporate sector. We hardly have any mechanism or instruments which would help the investors in managing the risk commensurate with their preferences. It is high time that option trading is launched in Indian stock exchanges. This paper provides a primer on option trading and a preliminary proposal for its implementation in India. For successful launching of option trading in India we would require the following: 1 The standardization of the terms of option contracts. 2 The careful selection of underlying security. 3 The appointment of a number of market makers with adequate financial resources. 4 The creation of an Option Clearing House as the single guarantor of every exchange traded option. 5 The creation of an active secondary market. 6 The creation of a central market place with its attendant regulatory, surveillance and price dissemination capabilities. 7 The creation of paperless trading and book-entry transfer system.

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Working Papers | 1991

Seed Replacement Practices

Gurdev Singh and Asokan S R

One important reason for low demand for quality seeds is the reportedly low seed replacement rate especially in case of non-hybrids. To investigate the reasons for such practices followed by the farmers is the main objective of this pilot study conducted in Faridkot district of Punjab. The study revealed that contrary to the belief a majority of farmers replace seed of all major crops within four years. In fact, the replacement was reported quicker than the perceived recommended replacement schedule in almost all crops. Even the perceived replacement schedule was much shorter than four years. In some crops majority of them replaced seed every year. However, the seed used by the farmers was rarely of standard quality (certified/labelled). Non-availability of quality seed of crops like cotton was the main reason for use of substandard seed. This may be the factor behind low expected yield as the reason for replacement which often occurs quicker than expected.

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Working Papers | 1991

Strategic Planning Practices of Small Scale Enterprises

Ramachandran K

Although there is some evidence to suggest that small scale enterprises also make strategic plans, there is still a lot of suspicion about its usefulness for small firms. The basic question is that given their level of operations and resource structure what kind of planning is possible in small firms. This study covering 117 small scale enterprises located in Ahmedabad attempts to answer some of the questions related to strategic planning practices of such firms. It is observed that most of the firms do undertake analysis of the constituents of the environment such as suppliers of materials, customers and implications of government policy changes. They also undertake analysis of their own strengths and weaknesses. Their planning horizon, however is limited to six months. It appears that considering their limited level of operations, and need to respond to environmental forces rather quickly, there is need to have speed and flexibility in planning and it may be because of this reason, at least partly that their plans are for short periods. Also there could be lack of awareness of the usefulness and importance of systematic planning. The paper also reports findings on the sources of information, frequency of review and related matters.

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Working Papers | 1991

Existence of Efficient and Egalitarian Efficient Tax Allocations

Lahiri Somdeb

In this paper, we study an optimal tax allocation problem where the utility of each agent depends on his own income as well as on the income of the other tax payers. The objective of the government is seen as maximizing tax incidence without subjecting the tax payers to too much hardship (sacrifice). In this framework we prove the existence of efficient tax allocations and subsequently we go on to establish the existence of egalitarian-efficient (i.e. equal sacrifice and efficient) tax allocations, under mild assumptions.

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Working Papers | 1991

A Performance Appraisal of Human Resource Development Function in Indian Organisations: A Preliminary Survey

T. V. Rao

The HRD function has gained a lot of momentum in the last decade. An earlier survey conducted in 1984 indicated that a number of HRD sub-system were being initiated in Indian industry. A detailed questionnaire was developed covering 94 different activities or tasks the HRD staff or those in-charge could undertake in any organization. This questionnaire was administered to 61 HRD staff form public sector and private sector organizations. The questionnaire assessed how well each of the 94 activities/tasks are being performed as perceived by the respondents. Their assessment indicates there are more similarities than differences in the way the HRD function is being performed in both public and private sector organizations. The study also indicates that conducting human process research, mobilising unions and associations to play a role in HRD and effective monitoring of HRD implementation are perceived as being performed inadequately in these organizations. Overall, while HRD function has caught up, it has a long way to go to be near "excellence".

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Working Papers | 1991

Threat Bargaining Problems with Correlated Beliefs

Lahiri Somdeb

In this paper we provide a general framework for studying threat bargaining games with correlated beliefs. In this framework we obtain a characterization of the Kalai-Smorodinsky solution without any monotonicity assumption. The approach adds a dose of realism to the already existing literature on threat bargaining games.

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Working Papers | 1991

Performance of Institutional Finance for Agricultural Development

Desai B M and Nambudiri C N S

This paper analyses the performance of rural institutional finance system and based on that draw implication for improving this performance. Section II provides a conceptualization of performance criteria. Section III discusses the results. And Section IV recapitulates main conclusions and implication. Main conclusions are that the rural institutional finance system has performed well but only considering long run performance. Short run growth rates display a disparate performance. Moreover, this system has performed better in deposit mobilization than in financing agricultural output and investment. Its performance on the functional structure of loans and loan recovery leaves much to be desired. Despite this, the RFIs are viable and have not suffered from scale diseconomies in their transaction costs. Similarly, agricultural productivity and investment have increased with the increase in various functions of the rural institutional finance system.

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Working Papers | 1991

Fujitsu LTD: A Case of Global Management in Telecomputers

Thomas Philip S and T. Madhavan

It is now almost axiomatic that the essence of corporate success lies in a felicitous combination of constancy of purpose and well coordinated operations. However, for global companies functioning in highly strategic environments, such as telecomputers, the artistry and power involved in prosecuting this simple dictum should be of a much higher-than-average order. To gain insights into this question, we undertook an exploratory study of a key protagonist in the world telecomputer industry using a case history approach based on available information. The paper describes Fujitsu's development into a global leader in telecomputers over the last 55 years. It concludes by highlighting some interesting managerial lessons including the importance of (a) the firm's focal faculties (b) industrial management reforms (c) the management of multicultural research centres (d) the coordination of strategic moves with key industry competitors and (e) the development of a nation's global network of strategic entities in the post-industrial management era.

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Working Papers | 1991

Some Concepts of Distributive Justice in Bargaining Problems

Lahiri Somdeb

In this paper we study the problems associated with distributive justice in an abstract framework originally conceived for the analysis of social choice and bargaining problems. Induced social choice correspondences are derived by considering alternatives which are invariant under permutations of the status-quo point. We study in particular the fairness correspondence and a generalized Walrasian bargaining solution and establish links between the two concepts. The analysis in this paper can proceed far beyond where our paper ends.

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