خرید و دانلود نسخه کامل کتاب Trading and pricing financial derivatives : a guide to futures, options, and swaps – Original PDF

Chapter 1 Introduction to Derivatives A financial derivative is an economic contract whose value depends on or is derived from the value of another instrument or underlying asset. Derivatives are categorized by the relationship between the underlying asset (the “underlying”) and the derivative such as a forward, option, or swap1); the type of underlying asset (such as equity derivatives, foreign exchange derivatives, interest rate deriv- atives, commodity derivatives, or credit derivatives); the market in which they trade (such as exchange-traded or over-the-counter); and their pay-off profiles. Derivatives can be used for speculative purposes or to hedge. A speculator is a trader who is taking positions with the goal of making a profit. A hedger is a trader who already has an economic exposure who takes an offsetting posi- tion (a hedge) in order to reduce a risk they already have exposure to. Very com- monly, companies buy currency forwards (agreements to make trade a currency exchanges at a future date) in order to limit (hedge against) losses due to fluc- tuations in the exchange rate of two currencies, this is an example of hedging. Third parties sometimes use publicly available derivative prices as educated pre- dictions of uncertain future outcomes, for example, the likelihood that a corpora- tion will default on its debts. The Uses of Derivatives Derivatives are used by investors for the following purposes: – Hedging or mitigating risk in an underly……