Assignment on Derivative Market - Assignment Point
Assignment on Derivative Market
Subject: Marketing | Topics:

Derivative market:

Financial derivative is a contractual agreement, whose profits or loss depends on the price of assets underlying in a contract.

Financial derivative product:

• Forward contract
• Future contract
• Option contract


Importance of financial derivative market:

1. Risk management:
•Hedging risk
•Transfer of risk
•Keeping risk at an acceptable level
2. Price discovery:
•Investors expectation of future price
•Forward or future price contains valuable information
•Option market provide valuable information about volatility and risk of assets
3.Operational advantage:
•Larger transaction cost
•Greater liquidity
•Short selling
Derivative Market

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