Derivatives
Contents
Acknowledgement
We would like to take this opportunity to thank all those who have helped us in completing this project report.
First of all we would like to thank our teacher Dr. Kumar Bijoy for guiding us throughout this project.
Then we would like to thank our parents for their immense support.
In the end we would like to thank GOD almighty for giving us strength to complete this project.
Introduction
A derivative is a financial contract which derives its value from the performance of another entity such as an asset, index, or interest rate, called the "underlying". Derivatives are one of the three main categories of financial instruments, the other two being equities (i.e. stocks) and debt (i.e. bonds and mortgages). Derivatives include a variety of financial contracts, including futures, forwards, swaps, options, and variations of these such as caps, floors, collars, and credit default swaps. Most derivatives are traded over-the-counter (off-exchange) or on an exchange while most insurance contracts have developed into a separate industry.
Many money managers use derivatives for a variety of purposes, such as hedging--by taking a position in a derivative, losses on portfolio holdings may be minimized or offset by profits on the derivative. Likewise, derivatives can be used to gain quicker and more efficient access to markets; for example, it may be easier and quicker to purchase an S & P 500 futures contract than to invest in the underlying securities.
History and Evolution
Although generally thought of as a high tech trading tool, derivatives have been around for a quite a while. Over 100,000 years ago, it is known that people bartered for goods and services. The problem with bartering is that it is hard to trade between items that are harvested at different times of year. Items that perished quickly are difficult to trade. The solution was to begin utilizing a less or non-perishable commodity such as wine, grains, or
Acknowledgement
We would like to take this opportunity to thank all those who have helped us in completing this project report.
First of all we would like to thank our teacher Dr. Kumar Bijoy for guiding us throughout this project.
Then we would like to thank our parents for their immense support.
In the end we would like to thank GOD almighty for giving us strength to complete this project.
Introduction
A derivative is a financial contract which derives its value from the performance of another entity such as an asset, index, or interest rate, called the "underlying". Derivatives are one of the three main categories of financial instruments, the other two being equities (i.e. stocks) and debt (i.e. bonds and mortgages). Derivatives include a variety of financial contracts, including futures, forwards, swaps, options, and variations of these such as caps, floors, collars, and credit default swaps. Most derivatives are traded over-the-counter (off-exchange) or on an exchange while most insurance contracts have developed into a separate industry.
Many money managers use derivatives for a variety of purposes, such as hedging--by taking a position in a derivative, losses on portfolio holdings may be minimized or offset by profits on the derivative. Likewise, derivatives can be used to gain quicker and more efficient access to markets; for example, it may be easier and quicker to purchase an S & P 500 futures contract than to invest in the underlying securities.
History and Evolution
Although generally thought of as a high tech trading tool, derivatives have been around for a quite a while. Over 100,000 years ago, it is known that people bartered for goods and services. The problem with bartering is that it is hard to trade between items that are harvested at different times of year. Items that perished quickly are difficult to trade. The solution was to begin utilizing a less or non-perishable commodity such as wine, grains, or
Bibliography: SSE http://www.sse.com.cn SZSE http://www.szse.cn CFFEX http://www.cffex.cn NSE http://www.nseindia.org.in