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From the economic point of view, financial derivatives are cash flows that are conditioned stochastically and discounted to present value. The market risk inherent in the underlying asset is attached to the financial derivative through contractual agreements and hence can be traded separately. [11] The underlying asset does not have to be acquired.
The XVA of Financial Derivatives: CVA, DVA and FVA Explained. Palgrave Macmillan. ISBN 978-1137435835. Ignacio Ruiz (2015). XVA Desks – A New Era for Risk Management. Palgrave Macmillan UK. ISBN 978-1-137-44819-4. Antoine Savine and Jesper Andreasen (2021). Modern Computational Finance: Scripting for Derivatives and XVA. Wiley. ISBN 978 ...
In finance, a forward contract, or simply a forward, is a non-standardized contract between two parties to buy or sell an asset at a specified future time at a price agreed on in the contract, making it a type of derivative instrument.
The derivatives market is the financial market for derivatives - financial instruments like futures contracts or options - which are derived from other forms of assets. The market can be divided into two, that for exchange-traded derivatives and that for over-the-counter derivatives. The legal nature of these products is very different, as well ...
In finance, an interest rate derivative (IRD) is a derivative whose payments are determined through calculation techniques where the underlying benchmark product is an interest rate, or set of different interest rates. There are a multitude of different interest rate indices that can be used in this definition.
C. Calendar spread; Callable bull/bear contract; Capital guarantee; Cash flow hedge; Cashflow matching; CDO-Squared; Chain of Blame; Chan–Karolyi–Longstaff–Sanders process
The Brownian motion models for financial markets are based on the work of Robert C. Merton and Paul A. Samuelson, as extensions to the one-period market models of Harold Markowitz and William F. Sharpe, and are concerned with defining the concepts of financial assets and markets, portfolios, gains and wealth in terms of continuous-time stochastic processes.
A foreign exchange derivative is a financial derivative whose payoff depends on the foreign exchange rates of two (or more) currencies. These instruments are commonly used for currency speculation and arbitrage or for hedging foreign exchange risk .