Derivatives flashcards

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What is a derivative? A derivative is a financial instrument whose value depends on one or more underlying assets
What are some common types of derivatives? forwards, futures, options and swaps
What are some common underlying that have derivatives? commodities, stocks, bonds, interest rates and currencies
Why do investors invest in derivatives? Derivatives provide leverage. Speculation. To hedge or migrate risk in the underlying.
Derivatives that are traded between two parties without going to the exchange are known as ______ Over the counter derivatives
What are come common examples of Over-the-Counter derivatives? Swaps, forwards rate agreements, exotic options
___ is the largest derivatives market The Over-the-Counter derivatives market. It is also highly unregulated when it comes to disclosure of information between the participating parties
Derivatives that are traded through derivative exchanges are known as? Exchange traded derivative contracts or ETD
What is a forward contract? It is an informal contract between two parties to buy or sell an asset at a specifies price on a future date
The price agreed upon on a forward contract is called? The delivery price
What are swaps? They are derivatives in which the parties exchange one cash flow against another

What is a derivative?

What are some common types of derivatives?

What are some common underlying that have derivatives?

Why do investors invest in derivatives?

Derivatives that are traded between two parties without going to the exchange are known as ______

What are come common examples of Over-the-Counter derivatives?

___ is the largest derivatives market

Derivatives that are traded through derivative exchanges are known as?

What is a forward contract?

The price agreed upon on a forward contract is called?

What are swaps?

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