Derivative and Its Impact on Stock Market

A Paper Presentation Derivative and its impact on capital market Derivative and its impact on capital market On Prepared by Ms. Vidhi Joshi Asst. Professor MBA Department T. N. Rao college of Management Studies Rajkot 1. Introduction to Derivative: The rapidity with which Indian capital market, corporate finance, banking and investment finance has witnessed a major transformation and structural change from the past one decade and this change in recent years has given birth to a new discipline that has come to be known as Financial Engineering. Financial engineering involves the design, the development, and the implementation of innovative financial instruments and processes, and the formulation of creative solutions to problems in finance. The last decade has witnessed the introduction of ‘derivatives’ as an innovative financial instrument in the Indian markets. One of the major objectives of these reforms was to bring the Indian capital market up to a certain international standard. Due to such reforming process, one of the significant step taken in the secondary market is the introduction of derivative products in two major Indian stock exchanges viz. National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) , with a view to provide tools for risk management to investors and to improve the informational efficiency of the cash market. A derivative is financial instrument whose value is ‘derived’ from another underlying security or a basket of securities the underlying is the identification tag for a derivative contract. Derivatives are instruments of risk hedging. In the Indian context the Securities Contracts (Regulation) Act, 1956 (SCRA) defines â€Å"derivative† as a security that is derived from a debt instrument, share, loan whether secured or unsecured, risk instrument or contract for differences or any other form of security, same as a contract which derives its value from the prices, or index of prices, of underlying securities. Derivative products includes futures, forwards, options and swaps, and these can be combined with each other or traditional securities and loans to create hybrid instruments. In other words, a future contract is a standardized agreement between the seller (short position holder) of the contract and the buyer (long position holder), traded on a futures exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a pre-set price. The future date is called the delivery date or final settlement date. The pre-set price is called the futures price. The price of the underlying asset on the delivery date is called the settlement price. Equity derivatives trading started on June 9, 2000 with introduction of stock index futures by Bombay Stock Exchange (BSE). National Stock Exchange (NSE) also commenced its trading on 12 June, 2000 based on S&P Nifty. Trading on NIFTY futures was introduced on the 12th of July 2000. Trading on stock futures was introduced in the NSE in the 9th November, 2001. Subsequently, other products like stock futures on individual securities, index options and options on individual securities were introduced. Forward Contract: A Forward Contract is a transaction in which the buyer and the seller agree upon a delivery of a specific quality and quantity of asset usually a commodity at a specified future date. The price may be agreed on in advance or in future. † Future Contract: It involves an obligation on both the parties i. e. the buyer and the seller to fulfill the terms of the contract (i. e. these are pre-determined contracts entered today for a date in the future) * Obligation to buy or sell * Stated quantity * At a specific price * Stated date (Expiration Date) Marked to Market on a daily basis Options: An Options contract confers the right but not the obligation to buy (call option) or sell (put option) a specified underlying instrument or asset at a specified price – the Strike or Exercised price up until or an specified future date – the Expiry date. † The Price is called Premium and is paid by buyer of the option to the seller or writer of the option. à ¢â‚¬  Types of option * Call Option * Put option Put Option: The right to sell a futures contract. It provides protection against falling prices and also sets a minimum price target. Call Option: The right to buy a futures contract. It protects against rising prices and it also allows participation in seasonal price rises. Swap: Swap is a contract between two parties to exchange a set of cash flows over a pre-determined period of time. Example ‘A’ agrees to pay cash based on the rate of return of an agreed stock market index to the second counter party ‘B’. Participants in Derivatives Market: 1. Hedgers: They use derivatives markets to reduce or eliminate the risk associated with price of an asset. Majority of the participants in derivatives market belongs to this category. 2. Speculators: They transact futures and options contracts to get extra leverage in betting on future movements in the price of an asset. They can increase both the potential gains and potential losses by usage of derivatives in a speculative venture. 3. Arbitrageurs: Their behaviour is guided by the desire to take advantage of a discrepancy between prices of more or less the same assets or competing assets in 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. Applications of Financial Derivatives: Some of the applications of financial derivatives can be enumerated as follows: 1. Management of risk: This is most important function of derivatives. Risk management is not about the elimination of risk rather it is about the management of risk. Financial derivatives provide a powerful tool for limiting risks that individuals and organizations face in the ordinary conduct of their businesses. It requires a thorough understanding of the basic principles that regulate the pricing of financial derivatives. Effective use of derivatives can save cost, and it can increase returns for the organisations. 2. Efficiency in trading: Financial derivatives allow for free trading of risk components and that leads to improving market efficiency. Traders can use a position in one or more financial derivatives as a substitute for a position in the underlying instruments. In many instances, traders find financial derivatives to be a more attractive instrument than the underlying security. This is mainly because of the greater amount of liquidity in the market offered by derivatives as well as the lower transaction costs associated with trading a financial derivative as compared to the costs of trading the underlying instrument in cash market. 3. Speculation: This is not the only use, and probably not the most important use, of financial derivatives. Financial derivatives are considered to be risky. If not used properly, these can leads to financial destruction in an organisation like what happened in Barings Plc. However, these instruments act as a powerful instrument for knowledgeable traders to expose themselves to calculated and well understood risks in search of a reward, that is, profit. 4. Price discover: Another important application of derivatives is the price discovery which means revealing information about future cash market prices through the futures market. Derivatives markets provide a mechanism by which diverse and scattered opinions of future are collected into one readily discernible number which provides a consensus of knowledgeable thinking. MOTIVATION FOR THE STUDY In the last decade, many emerging and transition economies have started introducing derivative contracts. Policy makers and regulators in these markets are concerned about the impact of futures on the underlying cash market. One of the reasons for this concern is the belief that futures trading attract speculators who then destabilize spot prices. Since futures encourage speculation, the debate on the impact of speculators intensified when futures contracts were first introduced for trading, beginning with commodity futures and moving on to financial futures. Before further regulations are introduced, it is essential to determine whether in fact there is a causal link between the introduction of futures and spot market volatility. It, therefore becomes imperative that we seek answers to questions like: What is the impact of derivatives upon market efficiency and liquidity of the underlying cash market? To what extent do derivatives destabilize the financial system, and how should these risks be addressed? Can the results from studies of developed markets be extended to emerging markets? Capital Market and Derivative segment in Indian Stock Market: Today Indian stock market is very sound in terms of participants from all sections, huge turnover and number of listed companies. Cash segment and derivative segment both have grown with each other. NSE and BSE are the major exchanges. Over the years Indian stock market has modernized with the use of high modern Information and Communication technology. Derivative instruments have become part and parcel of business world. Today, derivative instruments are used in all markets such as foreign exchange, shares, commodities etc. New, sophisticated, complex and exotic tools are being developed in different markets. The innovative derivative instruments have been developed in such a manner that these are used even by a common man. Although derivatives have been in existence for long in past in one or another form but present day sophisticated, standardized derivative products. Growth of Derivatives Market in India: Equity derivatives market in India has registered an â€Å"explosive growth† and is expected to continue the same in the years to come. Introduced in 2000, financial derivatives market in India has shown a remarkable growth both in terms of volumes and numbers of traded contracts. NSE alone accounts for 99 percent of the derivatives trading in Indian markets. The introduction of derivatives has been well received by stock market players. Trading in derivatives gained popularity soon after its introduction. In due course, the turnover of the NSE derivatives market exceeded the turnover of the NSE cash market. For example, in 2008, the value of the NSE derivatives markets was Rs. 130, 90,477. 75 Cr. whereas the value of the NSE cash markets was only Rs. 3,551,038 Cr. Table 1 : Turnover of Cash segment in India Year| Turnover at BSE| Turnover at NSE| Total Turnover| 1992-93| 45696| -| 45696| 993-94| 84536| -| 84536| 1994-95| 67749| 1805| 69554| 1995-96| 50064| 67287| 117351| 1996-97| 124190| 295403| 419593| 1997-98| 207113| 370193| 577306| 1998-99| 310750| 414474| 725224| 1999-00| 686428| 839052| 1525840| 2000-01| 1000032| 1339510| 2339542| 2001-02| 307292| 513167| 820459| 2002-03| 314073| 617989| 932062| 2003-04| 503053| 1099534| 1602587| 2004-05| 518715| 114007 2| 1658787| 2005-06| 816074| 1569558| 2385632| 2006-07| 956185| 1945287| 2901472| 2007-08| 1578857| 3551038| 5129895| 2008-09| 1100074| 2752023| 3852097| 2009-10| 1136513| 2805878| 3942391|

Poetry Essay Essay

Poetry is an imaginative awareness of experience expressed through meaning, sound, and rhythmic language choices so as to evoke an emotional response. Poetry has been known to employ meter and rhyme, but this is by no means necessary. Poetry is an ancient form that has gone through numerous and drastic reinvention over time. The very nature of poetry as an authentic and individual mode of expression makes it nearly impossible to define. Poetry is sometimes hard to understand but other times it’s as easy as one, two, and three. Sometimes people turn to poetry to vent their feelings, to tell their high school sweetheart they still love them, to get over grief and etc. Poetry can be inspirational and motivating. Poetry can be anything you want it to be. The plot of â€Å"Watch† by Frank Outlaw tells us that we should be careful about what we do and to choose wisely what we act on. One of the poetic devices in this poem is assonance. Assonance is the repetition of vowel sounds. The vowel sounds repeated in this poem are: A, E, I, O and U. Another poetic device found in this poem is imagery. Imagery is words or phrases that appeal to the senses. The poem is titled Watch, so I believe therefore, watch would be considered as imagery. This poem appeals to me because I agree that we should watch what we do, before we do that particular thing. The plot of â€Å"The Greatest Artist† by Udiah tells us that God is one of a kind and can create the most beautiful things in this world. It also tells us that only God can create the beautiful things on this Earth. The sky is God’s canvas to a beautiful masterpiece. It also states that whenever we are sad, he puts a smile across our face to let us know He’s there. One poetic device in this poem is rhyme. Rhyme is the similarity of ending sounds exsisting between two words. Some of the rhyming words are: compare and air, above and glove, fair and there. Another poetic device is metaphor. Metaphor is the comparison between two objects with the intent of giving clearer meaning to one of them. One of the metaphors in this poem is: God is the greatest artist. This poem appeals to me because I agree that God is the one and only who can create the most unique things and we always know he’s watching us with open eyes. The plot of â€Å"Before You† by William Arthur Ward tells us that we should think before we do. It also tells us that we should learn from different situations. Another thing it teaches is that we should use patience before expressing our thoughts. One of the poetic devices in this poem is repetition. Repetition is the repeating of words or phrases. The repetition in this poem is before you. Another poetic device is assonance. Assonance is the repetition of vowel sounds. The vowel sounds repeated in this poem are: A, E, I, O and U. This poem appeals to me because I agree that we should think before we act. I dedicate this poetry book to my mom. I included certain poems because poetry has such a special meaning for a special person. She is a true genuine person with a great attitude towards life. Who expresses emotions profoundly through words. I included certain poems because of the motivation and inspiration they have. I’m most inspired by Adele, Adele is a famous London singer, who expresses music through her heartfelt experiences.

Is US foreign policy driven by oil Essay Example | Topics and Well Written Essays - 4000 words

Is US foreign policy driven by oil - Essay Example The U.S. foreign policy is thus energy driven and security driven and these factors are integrated to exhibit the American dominance over the world (Bromley, S 2005 p.225 - 227). ‘Blood for oil’ is the term coined by social and political analysts to explain the overt actions of the United States to secure the oil fields in the Middle East. Michael Klare critises the national security policy of United States in Blood and oil. The author argues that the military and foreign policy of US has been driven by the need to ensure a safe method to source foreign oil specifically from the Middle East. Dependence on oil from foreign sources is continuously gowing and the US forces are deemed to fight to secure oil producing nations and supply routes. It is further argued that even if the United States diversifies its foreign oil supply sources, there is very less probability that the dependence on Gulf oil would reduce and the diversifiication of sources may increase the probablities of American involvement in conflict in other parts of the world. In the race to secure major shares of oil from other competitive nations, the U.S. is also highly probable to engage in war with China and Russia. Klare concludes by suggesting methods to reduce the costs involved for oil dependence that comes in the way of war and disharmony. The alternative methods suggested include a better national energy strategy of integrity and autonomy that detaches its method to secure energy from security obligations to governments abroad, reduction of oil consumption and to speed up methods to develop alternative energy sources. In short, Klare critices the foreign policy of U.S. that brings in consequences that are much underappreciated (Klare,M 2004). The national interest of United States is to remove any encumbrances or obstacles that obstruct the Americans in their pursuit for a better living and happiness. In

SEC-10K Research Paper Example | Topics and Well Written Essays - 1000 words

SEC-10K - Research Paper Example It competes with the best fashion and luxury retailers-Saks Fifth Avenue, Bloomingdales and Lord & Taylor. Fiscal Year The company fiscal year comprises 52/53 weeks. The year ends on the Saturday closest to 31st January. The fiscal year 2012 ended on 2nd February 2013 which was a 53 week year. (Nordstrom 10-K filing report, 2013) Financial Statements The consolidated financial statements of the company include the statement of earnings which shows the revenues and expenses incurred as well as the profits made the company; balance sheet which shows the financial position of the company on a specific date; statement of shareholders’ equity which shows the changes in the equity of the company over the year; and statement of cash flows which shows the inflow and outflow of cash during the year. (Nordstrom 10-K filing report, 2013) Sales Nordstrom Inc registered a strong sales growth of 9.6% on YOY basis in 2012. The company’s performance continued to impress the investors w hen the combined online and store sales per square foot reached $470 in 2012. However, the company saw its cost of goods sold increasing by 12.7% which reduced the company gross margins and signified inefficiencies in the system. The gross margin fell from 37.2% in 2011 to 26.8% in 2012. Nonetheless, the fall in margin was insignificant. The absolute amount of gross profit increased 10.9% due to an increase in the overall sales of the company. (Nordstrom 10-K filing report, 2013) The strong sales growth was tied to the strong Loyalty Program which rewards the repeat customers as well as enhanced consumer service. The company saw an increase in almost in all categories including handbags, clothing and cosmetics. The second half of 2012 saw a significant improvement in sales owing to an increase in sales of women’s apparel. Overall, the women contributed towards 44% of the total sales of the company. (Nordstrom 10-K filing report, 2013) Inventory Nordstrom values its inventory according to lower the cost or market value principle following the retail inventory method. According to this method, the inventory is valued using the pre-calculated cost to retail ratio and the value of ending inventory. In retail industry, reserves for obsolescence are also created based on the consumer demand, inventory trends as well as the changing environment (Nordstrom 10-K filing report, 2013) As leading fashion retail, Nordstrom lays a stress on inventory management to improve its margins; too much inventory increases costs and reduces the margins whereas too less inventory leads to shortages and dissatisfies customers and a negative effect on revenue. Therefore, inventory management plays a pivotal role in the operations at Nordstrom Inc. (Nordstrom 10-K filing report, 2013) The Company has been investing in increased shelf space and racks in 2012 which has led to an increase in inventory by 18.5%. Further insights into the company show that the inventory turnover reduce d from 5.56 to 5.37 in 2012 which signaled that the inventory remained on the shelves for 67 days in 2012 as compared to 65 days in 2011. Due to this reduced turnover, the company had more ending inventory per square foot in 2012 equivalent to $53.8 as compared $46.4 in 2011. (Nordstrom 10-K filing report, 2013) Accounts Receivable The management of account receivable measures the efficiency of the company’s operations and management team. The days’ sales outstanding of the company declined to 65 days in 2012 from 70 days in 2011 despite an increase in the receivables

INSURANCE MARKETS & OPERATIONS Essay Example | Topics and Well Written Essays - 2250 words

INSURANCE MARKETS & OPERATIONS - Essay Example The various impacts of the risks that affect the insurance industry are analyzed along with their impact upon the demand and supply of insurance. Nonetheless the impact of the demand and supply upon the insurance and upon the industry as a whole is examined along with their impacts upon alternation of the industry structure. Factors that affect various insurance operations are determined with the intensity of their impact regarding the change in supply and change in the insurance industry thus resulting in the change in the structure. The future of the insurance amounting to various factors that accounts for the change in the industry and how they shall be impacting the industry in the future is analyzed. The scope of the industry in the future regarding changes in the demand and supply along with the structural changes that shall be evolved so as to benefit from the external factors is determined (Rejda, n.d.). The response of the industry regarding the factors is analyzed in curren t and future terms and the future of the insurance industry is determined regarding change and the external factors. ... Amal, et al., 2012). The external factors of the insurance industry are discussed in detail below. Risks The insurance industry is to account and tackle risks that are faced by various entities. The change in the intensity of the risk determines the demand and supply of insurance. The structural risks that have evolved in the recent years when the company mergers enhanced and various companies started consolidating the risk increased. There are various risks factors affecting the insurance industry and they are categorized differentially along with the nature and impact (Coomber, 2006). The change in the risks that are to be faced the insurance industry changed in accordance so as to manage those risks. Economic Risks The economic risks increased when the global crises in various economies increased and thus impacted the insurance industry. Major systematic financial failures resulting in the closure of many corporates such as Enron and Lehman Brothers Bank has gathered the intention towards reconsideration of risk (Jeffrey & Amy, 2004). The economic changes around the world have caused the insurance industry to realize the intensity of the risks that in increasing and thus account for the changing and increasing risk of economy to incorporate in its operations and structures. The financial imbalances around the globe and the change in the incomes have caused the insurance industry to reanalyze the demand of the insurance. Environmental Risks The definition of the risks totally changed when the environmental changes in the globe began much of a concern. The development and the impact of the risks that is faced by the environment caused the insurance industry as how the

Comparative Analysis of FDI Trends in China and India Essay

Comparative Analysis of FDI Trends in China and India - Essay Example Foreign Direct Investment â€Å"Foreign direct investment is defined as investment by a resident entity in one economy with the objective of obtaining a lasting interest in an enterprise resident in another economy† (OECD, 2010 p88). Foreign direct investment involves a company in one country investing in another entity in another nation to attain a long-term business interest in a business that exists in another economy. In other context, any investing activities that control and manages value creation in other countries is considered a foreign direct investment (Peng, 2011). These entities are known as multinational enterprises and they aim at creating control either through agreement or equity acquisition in a foreign country to help the firm obtain some advantages in the foreign nation (Peng, 2011). â€Å"Foreign direct investment is defined as an investment involving a long-term relationship and reflecting a lasting interest and control by a resident entity in one econom y in an enterprise resident in another economy† (Takamura, 2011 p245). This definition of FDI focuses on the long-term aspect of FDIs. This suggests that these foreign direct investments seek to attain some relationship that would span into the distant future. This is to be separated from short-term interests which might last for three years or less. Such arrangements cannot be classified as FDIs they are more or less some kind of operational agreement and may not qualify to be viewed as an FDI. Examples of FDIs include building production plants to retain control and acquiring a research and development entity in a foreign country (Neuhaus, 2011). Prompters of FDIs, OLI Theory Every business exists to maximise profits by cutting down costs and...This paper clarifies the real reasons behind China's increasing growth in FDI. It examines why China' FDI levels has continued to increase recently. In doing this, there has been undertaken a comparative analysis of China's FDI trends with the Indian FDI trends. In attaining the aim of the research, the objectives were examined, such as review of the vital factors in the movement of FDI in the global context, analysis of the trends in FDI in China, analysis of FDI trends in India and a comparison with China, observation of the differences between the Chinese and Indian situation in that field. In 2010, the World Investment Prospects Survey released by the UN Conference on Trade and Development showed that China is the most popular destination for foreign trade in the World. China increased its FDI by 20% between 2009 and 2010. The main factor that prompted China to become the leading destination for foreign investment was the changes that occurred within the country's national and legal structures. Foreign direct investment involves one entity investing in a business venture in a foreign country. These investments were often meant to promote control in a foreign country in order to attain power and further their interest in a foreign entity. FDI is meant to enable a given business to attain opportunities in foreign countries. Ownership, Locational Advantages and Internalisation form the crux of FDI. Ownership relates to how a business attains control and rights in a foreign business. Locational advantages relate to the ability of a business to take advantage of the local opportunities in a country. Internalisation refers to how a business uses the advantages that the FDI brings to it.

Language Issues in Public Discourse Research Paper - 1

Language Issues in Public Discourse - Research Paper Example This essay will explore three ways in which the English language is changing, and the discourse around those changes, as they are being debated and discussed in the media. Political language and how it changed during the Bush era in the United States is being discussed widely in academic circles and this phenomenon will be examined and analyzed briefly. The printed media particularly in Great Britain raises the question of American terms and their effect on English worldwide. Contemporary magazine and newspaper articles form the basis of the discussion of the British attitude to American language in this essay. Current discussions regarding spelling are examined, from the perspective of young people, citing as examples a web forum, and the transcript of a high school debate. Finally, the trend toward politically correct language is the focus, with spoken and institutionalized language being examined. In short, this essay will comment on the changing language and how these changes are perceived across a reasonably wide spectrum of English speakers. (Not included in word limit) The Essay When discourse is analyzed, the linguistic output of someone other than the analyst is examined (Brown & Yule, 1983: 2). This implies that the analyst also contributes his/her own meaning to the analysis, and that the context of more than just the words, and the grammar of the language are at play. Brown and Yule (1983: 3) further contend that the language may contain features such as â€Å"†¦ hesitations, slips and non-standard forms† so that an analysis of written text on its own is perhaps never altogether complete. It is, however, also true that â€Å" †¦ the task is this: to think more deeply about the meanings we give people’s words do as to make ourselves better, more humane people and the world a better, more humane place.† (Gee, 2005: 3). Hence it is necessary to examine many aspects of language if a fuller understanding of the meaning of s ocial worlds as all individuals experience them is to be reached. There are certain aspects of language that are clearly of some concern to analysts and general public commentators. Media, both print and electronic, carries a significant amount of comment on the changing nature of English. Sometimes these aspects are serious and of great importance in the formation of the societies and their attitudes, values and behaviors; sometimes they are less serious but still interesting from a social and psychological perspective. One area which does carry great weight is in the leadership of societies. The leaders of communities worldwide do use language to form meanings and the understanding of the public. Hence it is necessary that everyone remain aware of the possible hidden meaning and unrevealed intentions of leaders and particularly politicians. When politicians speak, it is widely accepted that their motives are not always directly connected to the words and language they are using. I nevitably, their language has characteristics that show the real intention of their words: to persuade the public that what they say is correct, and that they should be voted for in the next election. Elena Mihas of the University of Wisconsin-Milwaukee has examined and commented on the language used during the Bush era in the United States. She highlights specifically the metaphoric and euphemistic forms of language used by politicians in this period, in addition to examining the coherence, arguments,

Descriptive Paragraph Essay Example | Topics and Well Written Essays - 500 words - 1

Descriptive Paragraph - Essay Example Touch: There is water spray flying everywhere and it sprinkles onto my face like little pinpricks of needles, hard and sharp. Wherever the salty spray lands, there is a rough residue it leaves behind as the spray begins to layer up on my skin. It is cold and sticky and when I press my fingers together, they begin to feel glued together. My hair is now in ratted strings around my head, full of the sea brine which dribbles down over my face, as if there were not enough salty layers to contend with already. Taste: The salty spray is sharp on my lips, especially where I have a little paper cut. Naturally, it stings and the salty brine is bitter and acidic to the taste. My tongue is in salt overload and I wonder if I will ever taste anything else but salt again. That taste of old brine, centuries of salty water that have wrapped other ships in its passing, is bitter and acrid, even deeply pungent. Smell: The taste of the brine also impact my smelling as it seems repeated there in my nose too. Yet, there is the fresh ocean smell that is always so wonderful, that which draws generations of sailors to the seas. It is an old smell but at the same time, it washes fresh the air and fills the senses with a wonderful aromatic memory of old wooden tar-glued boats. Sound: The sound of crashing waves on rocks and on itself is monumental, a booming sound which reverberates within my body. The force and strength of the water and waves that roil back and forth, are like no other force in nature. After the waters hit the rocks, there is the rippling sound of water withdrawing back into itself, only to gather once again into one big push, rushing forward, slamming against those rocks again, and then again and again. There is no withstanding the fury and the turmoil of the open ocean when it is angry! As I look out at the boat which seemed closer just a time ago, it is now

Rc car shell Essay Example | Topics and Well Written Essays - 2500 words

Rc car shell - Essay Example Shells for RC cars can be manufactured using a variety of ways, which have similarities but differ in different ways. The common aspect with all the manufacturing processes is that they require a mould or pattern that takes the shape of the car shell so that the design of the shell can be similar. The moulds are also different because some of them are positive whereas others are negative (Groover 2013). Before manufacturing begins, the company must choose the best process in terms of a variety of needs. For instance, the manufacturing process to be chosen should be fast, time conscious and should also have the ability for a high product output but at the same time produce high quality products. It should also use readily available and cheap raw materials rather than expensive ones. As stated above, many processes exist that can be applied when manufacturing RC Buggy shell. These include Compression moulding, Reaction Injection Moulding, thermoforming and transfer moulding. All these manufacturing processes are viable for manufacturing an RC Buggy shell. This paper will discuss all these manufacturing processes in terms of their viability, advantages and disadvantages and make a recommendation on the one that is the most viable option among them for manufacturing an RC Buggy shell. Reaction Injection Moulding: This is one of the methods that are used to manufacture shell for RC cars. In this method, the manufacturer has to build a special mould using a pattern that is similar to the shape of RC buggy Shell. After the first process, the manufacturer can then start working with the material that should be used. This is important because the method requires a mixture of two materials that must be put into a mould cavity, where a chemical reaction is introduced so that these two materials can react to form a solid in a solidification process that creates a cross-link between the materials