Intro to Derivs

0.0(0)
Studied by 0 people
call kaiCall Kai
learnLearn
examPractice Test
spaced repetitionSpaced Repetition
heart puzzleMatch
flashcardsFlashcards
GameKnowt Play
Card Sorting

1/5

encourage image

There's no tags or description

Looks like no tags are added yet.

Last updated 7:32 PM on 4/24/26
Name
Mastery
Learn
Test
Matching
Spaced
Call with Kai

No analytics yet

Send a link to your students to track their progress

6 Terms

1
New cards

What is a derivative

An instrument whose value depends on, or is derived from another asset

2
New cards

Why are derivatives important

They play a key role in transferring risks in the economy

3
New cards

How are derivatives traded

  • Exchanges such as Chicago Board Options Exchange

  • OTC market where traders working for institutions contact each other directly

4
New cards

How derivatives are used

  • Hedge risks

  • Speculate (take a view on future direction of market)

  • Lock in arbitrage profit

  • Change nature of a liability

5
New cards

Types of Derivatives

  • Forwards

  • Futures

  • Swaps

  • Options

6
New cards

Forward Contract

  • Agreement to purchase an asset at a time in the future at an agreed price

  • Forward price is the delivery price that would be applicable to the contract if negotiated today

  • Forward price may be different for contracts of different maturities (ex. Spot = 1.4542/1.4546, 1M Forward = 1.4544/1.4548, 3M Forward = 1.4547/1.4551)