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
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does a futures contract differ from a forward contract? Answer: Foreign currency futures contracts‚ or futures contracts for short‚ allow individuals and firms to buy and sell specific amounts of foreign currency at an agreed-upon price determined on a given future day. Although this sounds very similar to forward contracts‚ there are a number of important differences between forward contracts and futures contracts. The first major difference between foreign currency futures contracts and forward
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the new financial instruments have been developed in the financial markets‚ which are also popularly known as financial derivatives‚. The basic purpose of these instruments is to provide commitments to prices for future dates for giving protection against adverse movements in future prices‚ in order to reduce the extent of financial risks. Today‚ the financial derivatives have become increasingly popular and most commonly used in the world of finance. This has grown with so phenomenal speed all
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value of together more basic underlying variable. These are also known as contingent claims. Derivatives securities have been very successful in innovation in capital markets. The emergence of the market for derivative products most notably forwards‚ futures and options can be traced back to the willingness of risk-averse economic agents to guard themselves against uncertainties arising out of fluctuations in asset prices. By their very nature‚ financial markets are market by a very high degree of
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problems for FINA 0301 Derivatives Multiple Choice 1. Which from the following list is NOT a kind of derivative? (a) Options (b) Futures (c) Swaps (d) Commodities 2. A derivative can be used for the following purpose except (a) Risk management (b) Speculation (c) Manipulating the market (d) Reducing the transaction cost 3. The value of a forward contract at the time of inception is (a) Zero (b) Positive (c) Negative (d) unknown If you expect that market will be bullish‚ you should take
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The History of Derivatives: A Few Milestones EFTA Seminar on Regulation of Derivatives Markets‚ Zurich‚ 3 May 2012 Steve Kummer (research and redaction) and Christian Pauletto (concept and speech delivery) Policy and Trade in Services Division State Secretariat for Economic Affairs SECO Federal Department of Economic Affairs FDEA Introduction This presentation contains a selection of records and events that constitute a part of the history of derivatives. It relates how derivatives date
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BOOK EXAMINATION MULTIPLE-CHOICE QUESTIONS NB: Indicate the answer you think is correct on the computerised sheet 1. The price of a currency forward contract is less than the current spot price (the foreign currency is at a discount). If the contract price is theoretically correct A: rf ( rd B : rf = rd C: rf ( rd* D: We cannot tell on the available information NB: rf = foreign interest rate; rd = domestic interest rate The foreign
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MAKING INVESTMENT EASIER GIVING CUSTOMER ADVICE MAKING THE MARKET MORE ASSESSIBLE “OUR AIM IS TO IMPOWER THE INVESTOR TO MAKE INVESTMENT DECISION THROUGH QUALITY ADVICE AND SUPERIOR SERVICE” Sharekhan limited Amravati branch. Tank Complex‚ Above Union Bank‚ Rajkamal Square‚ Amravati www.sharekhan.com COMPANY PROFILE Sharekhan is a firm which is working under SSKI
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index or reference rate )‚ in a contractual manner. The underlying asset can be equity ‚ forex commodity or any other asset. Topics To Be Covered •History Of Derivative Markets in India •Basics •OTC ( Over the Counter) •Forwards •Futures •Options •Swap •Future Of Derivative Markets in India •Intra Day Trading Basic Purpose of Derivatives • In Derivative Transactions‚ one party’s loss is always another party’s gain • The main purpose of derivatives is to transfer risk from one person
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CHAPTER 2 Mechanics of Futures Markets Practice Questions Problem 2.8. The party with a short position in a futures contract sometimes has options as to the precise asset that will be delivered‚ where delivery will take place‚ when delivery will take place‚ and so on. Do these options increase or decrease the futures price? Explain your reasoning. These options make the contract less attractive to the party with the long position and more attractive to the party with the short position. They therefore
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