Intro_01 - FIN 459659 Introduction to Derivatives Dr....

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FIN 459-659 Introduction to Derivatives Dr. Fernando Diz
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Course Objectives The main objective of this course is: To provide the hands-on “know-how” to trade  derivative contracts for profit and risk  management.
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Today’s class objectives Describe what a derivative contract is. Define and calculate the notional value of  a derivative. Define and calculate the leverage of a  derivative. Define what forward, futures, and option  contracts are and how they can be used.
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Derivative Securities   A  derivative contract  is a financial  contract or agreement  that gives you  control over an underlying  commodity .
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Derivative Securities Why derivative? The value  of this contract derives  from the  value of the commodity it gives you control  over.
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Definitions Financial contract  Underlying commodity
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Derivative Securities Example Crude Oil       Futures Electricity          Forwards Stock             Options The commodity The derivative
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Notional Value It is the amount of money of the  commodity controlled with a derivative  contract.
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Step 1: find out how much of the   commodity the derivative controls. Step 2: find out how the price of the  commodity is quoted in the contract. Step 3: multiply the price of the commodity 
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This note was uploaded on 02/09/2010 for the course FIN 459 taught by Professor Yildary during the Spring '07 term at Syracuse.

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Intro_01 - FIN 459659 Introduction to Derivatives Dr....

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