Financial derivatives are financial instruments that are linked to a specific financial instrument or indicator, and through which specific financial risks can be traded...
The limitations of derivatives are as follows:
Speculative and Gambling Motives: As derivatives offer leveraged positions, it allows participants with even low capital to...
The importance of derivatives are as follows:
Reflect Perception of Market Participants: In a developed and organized market, the price of the derivatives will...
Derivatives are used by businesses, individuals, and governments to accomplish a wide variety of objectives. These may be broadly classified into the following categories:
Hedgers
Hedgers...
Despite the fear and criticism with which the derivative markets are commonly looked at, these markets perform several economic functions:
1. Management of Risk
Financial derivatives...
Broadly derivatives can be classified into below categories:
1. On the Basis of Underlying Assets
“Underlying asset” is a term used in derivatives trading, such as...