Lesson 6 Financial derivatives

Lesson 6 Financial derivatives - Outright contracts Forward...

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Financial derivatives -
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Managing risks – case study foreign exchange market
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Financial flows are affected by The real economy Risks: transaction exposure, translation exposure Speculation
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Example: How do you make money on the forex market?
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Foreign exchange market: Exchanging currency and collecting fee Currency arbitrage Speculating on the future Active involvement (“attacking the currency”)
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Issues: Destabilizing speculative movements Risk in fluctuations caused by the real economy > managing risk: financial derivatives
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The organization of the derivatives market
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Unformatted text preview: Outright contracts Forward contracts (called futures if they are standardized and traded on the secondary market) Swaps Options Ability up to a certain date to make a purchase Complex derivatives Credit default swap Benefits of certain financial instruments, swap them Collateralized debt obligations Etc. Organization of the market Market traded derivatives Over the counter derivatives Oversight of derivatives Clearing houses Unregistered sales...
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Lesson 6 Financial derivatives - Outright contracts Forward...

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