Section outline

  • Learning Outcomes:

    The students should be able to:

    a.        Define a derivative and distinguish between exchange-traded and over-the-counter derivatives;
    b.       Contrast forward commitments with contingent claims;
    c.        Define forward contracts, futures contracts, options (calls and puts), swaps, and credit derivatives and compare their basic characteristics;
    d.       Describe purposes of, and controversies related to, derivative markets;

    Chapter Content:

    • Definitions and uses, 
    • The structure of derivative market, types of Derivatives, 
    • The purposes and benefits of Derivatives, 
    • Criticisms and misuses of Derivatives, 
    • Elementary principles of Derivatives pricing.