Exploring the world of financial derivatives: types and functionalities
Financial derivatives are instruments that are based on the value of an underlying asset, such as stocks, bonds, currencies or commodities. These instruments allow investors to speculate on the price movements of these assets without needing to physically own them.
Types of financial derivatives
Futures: Contracts in which the parties agree to thailand mobile phone number example buy or sell an asset at a future date at a specified price.
Options: Contracts that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a specific price on a specific date.
Swaps: Agreements in which two parties exchange cash flows based on different interest rates or currencies.
Functionalities of financial derivatives
Financial derivatives have various functionalities , among which the following stand out:
Hedging: Allows investors to protect themselves against the risk of price fluctuations.
Speculation: They provide the opportunity to make profits from favorable movements in the prices of underlying assets.
Arbitrage: They enable the exploitation of price differences between markets to obtain benefits.
Exploring the multiple applications of financial derivatives
Financial derivatives are instruments that are derived from an underlying asset, such as stocks, bonds, indices, currencies, among others. These financial instruments are used to manage risk, speculate or arbitrage in financial markets.
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Applications of financial derivatives
Applications of financial derivatives
Risk management: One of the main applications of financial derivatives is risk management. Companies can use derivatives to protect themselves against possible fluctuations in the prices of the underlying assets.