ANALYSE OPTIONS AS FORMS OF DERIVATIVE INSTRUMENTS

Analyse options as forms of derivative instruments

Analyse options as forms of derivative instruments

A derivative instrument (or easily derivative) is a financial equipment which draws from its worth from the worth of some other financial instrument or variable. For demonstration, a supply option is a derivative because it draws from its worth from the worth of a stock. A concern rate swap is a derivative because it draws from its worth from one or more concern rate indices. The value(s) from which a derivative draws from its worth is called its underliers. (Glenn, 2004, pp. 40)Derivative ...