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    Derivatives are financial instruments whose value is dependent on an underlying asset such as stocks, bonds, commodities, currencies, interest rates and market indexes. Derivatives allow investors to control their risk exposure and transfer risk between parties. Common derivatives include options, futures, and forwards which give the right to buy or sell an underlying asset at a specific price.

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    Derivatives are financial instruments whose value is dependent on an underlying asset such as stocks, bonds, commodities, currencies, interest rates and market indexes. Derivatives allow investors to control their risk exposure and transfer risk between parties. Common derivatives include options, futures, and forwards which give the right to buy or sell an underlying asset at a specific price.

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    12 views4 pages

    Derivatives

    Uploaded by

    pranchh
    Derivatives are financial instruments whose value is dependent on an underlying asset such as stocks, bonds, commodities, currencies, interest rates and market indexes. Derivatives allow investors to control their risk exposure and transfer risk between parties. Common derivatives include options, futures, and forwards which give the right to buy or sell an underlying asset at a specific price.

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    Attribution Non-Commercial (BY-NC)
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    Derivatives

    -RAVI SHAH
    Basic

    A derivative (or derivative security) is a


    financial instrument whose value
    depends upon the value of other, more
    basic, underlying variables.
    Basic

     Sowhy do we have derivatives and


    derivatives markets?
     Because they somehow allow investors to
    better control the level of risk that they bear.
     They can help eliminate idiosyncratic risk.

     They can decrease or increase the level of


    systematic risk.
    Basic
     Some common examples include things such as
    stock options, futures, and forwards.

     An option which conveys the right to buy


    something is called a call; an option which
    conveys the right to sell is called a put. The
    reference price at which the underlying may be
    traded is called the strike price or exercise price.

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