By Andrew M. Chisholm
ISBN-10: 0470749377
ISBN-13: 9780470749371
Derivatives are all around the sleek international and it is vital for everybody in banking, funding and finance to have a superb figuring out of the topic. Derivatives Demystified presents a step by step advisor to the topic, permitting the reader to have a great, operating realizing of key spinoff products.
Adopting a hugely obtainable process, the writer explains by-product items in common phrases and with out the advanced arithmetic that underlie the topic, concentrating on useful functions, case reports and examples of ways the goods are used to unravel real-world difficulties. Derivatives Demystified follows a chain that's designed to teach that, even if there are lots of purposes of derivatives, there are just a small variety of simple development blocks, specifically forwards and futures, swaps and suggestions. The booklet indicates how every one construction block is utilized to varied markets and to the answer of varied hazard administration and buying and selling problems.
This new version may be absolutely revised to mirror the numerous adjustments the derivatives markets have visible over the past 3 years. New fabric will contain a complete background of derivatives, top as much as their use and abuse within the present credits crisis. it's going to additionally function new chapters on rules and keep watch over of derivatives, commodity derivatives, credits derivatives and dependent items and new by-product markets together with inflation associated and assurance associated products.
Derivatives Demystified is key analyzing for everybody who operates within the monetary markets or in the company atmosphere who calls for a superb realizing of those vital monetary tools.
Read or Download Derivatives Demystified: A Step-by-Step Guide to Forwards, Futures, Swaps and Options PDF
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Additional resources for Derivatives Demystified: A Step-by-Step Guide to Forwards, Futures, Swaps and Options
Example text
This is because of transaction costs. Buying and holding a share involves paying brokerage and other fees. Maintaining a short position involves borrowing shares and paying fees to the lender. The forward price and commodities How does the cash-and-carry method work with forward contracts on nonfinancial assets? It is commonly applied to gold and silver, which are held for investment purposes. However it has to be used with caution in the case of commodities that are held primarily for consumption.
The interest cost for six months is therefore $4 million. However this time a settlement sum of $1 million is received from the FRA dealer. a. 2. The horizontal axis shows a range of possible LIBOR rates for the future time period covered by the FRA deal. The dotted line shows the company’s effective rate of borrowing for the period if it buys the FRA. e. if the company leaves the interest rate exposure unhedged. a. It is protected against increases in interest rates for that period. By the same token, however, it cannot benefit from a decline in interest rates.
The interest cost for six months is therefore $4 million. However this time a settlement sum of $1 million is received from the FRA dealer. a. 2. The horizontal axis shows a range of possible LIBOR rates for the future time period covered by the FRA deal. The dotted line shows the company’s effective rate of borrowing for the period if it buys the FRA. e. if the company leaves the interest rate exposure unhedged. a. It is protected against increases in interest rates for that period. By the same token, however, it cannot benefit from a decline in interest rates.
Derivatives Demystified: A Step-by-Step Guide to Forwards, Futures, Swaps and Options by Andrew M. Chisholm
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