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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. Derivatives therefore allow the breakup of ownership and participation in the market value of an asset. This also provides a ...
Financial instruments are monetary contracts between parties. They can be created, traded, modified and settled. They can be cash (currency), evidence of an ownership, interest in an entity or a contractual right to receive or deliver in the form of currency (forex); debt (bonds, loans); equity (); or derivatives (options, futures, forwards).
Derivatives are a kind of financial security that get their value from another underlying asset, such as the price of a stock, a commodity such as gold or even interest rates. Many kinds of ...
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 ...
Collateral management is the method of granting, verifying, and giving advice on collateral transactions in order to reduce credit risk in unsecured financial transactions. The fundamental idea of collateral management is very simple, that is cash or securities are passed from one counterparty to another as security for a credit exposure. [ 9 ]
The Capital Markets Authority of Kenya (CMA) is a government financial regulatory entity responsible for supervising, licensing and monitoring the activities of the capital markets within the Republic of Kenya, market intermediaries, including the stock exchange, and the central depository and settlement system and all other persons licensed under the Capital Markets Act of Kenya.
In finance, a contingent claim is a derivative whose future payoff depends on the value of another “underlying” asset, [1] [2] or more generally, that is dependent on the realization of some uncertain future event. [3] These are so named, since there is only a payoff under certain contingencies. [4]
A fund derivative is a financial structured product related to a fund, normally using the underlying fund to determine the payoff. This may be a private equity fund , mutual fund or hedge fund . Purchasers obtain exposure to the underlying fund (or funds) whilst improving their risk profile over a direct investment.