What are Financial Derivatives? What are the financial derivatives

Financial derivatives refer to a financial contract whose value depends on one or more underlying assets or indices, and the basic types of contracts include forwards, **, swaps (swaps) and options. Financial derivatives also include hybrid financial instruments with one or more of the characteristics of forwards,**, swaps (swaps) and options.

Financial derivatives, also known as financial derivatives, are financial instruments derived from native financial instruments (**, bonds, certificates of deposit, currency, etc.), and their value depends on the underlying underlying assets.

Financial derivatives, also known as financial derivatives and financial derivatives, refer to contracts whose value depends on changes in the value of the underlying asset, and it has no value of its own. It is a financial instrument based on or derived from a financial underlying product.

Financial derivatives refer to financial products based on traditional financial products such as currencies, bonds, and **, and characterized by leveraged credit transactions.

1. Financial derivatives include the following:

1.Derivatives of equity products. refers to an index of ** or **.

Financial derivatives of the underlying instrument.

It mainly includes **** and ** options.

Indices, Index Options, and a hybrid of the above contracts.

2.Currency derivatives. It refers to financial derivatives based on various currencies, mainly including forward foreign exchange contracts, currencies**, currency options, currency swaps and hybrid trading contracts of the above contracts.

3.Interest rate derivatives. It refers to financial derivatives based on interest rates or interest rate carriers, mainly including forward interest rate agreements, interest rates**, interest rate options, interest rate swaps and hybrid trading contracts of the above contracts.

4.Credit derivatives. It is a type of derivative product with the credit risk or default risk contained in the underlying product as the basic variable, which is used to transfer or prevent credit risk, and is the most rapidly developing type of derivative product since the 90s of the 20th century, mainly including credit swaps, credit-linked notes and so on.

5.Other derivatives. In addition to the above four types of FDIs, there are also a significant number of FDIs developed on the basis of non-financial variables, such as weather** to manage the risk of temperature change, politics to manage political risk**, catastrophe derivatives to manage catastrophe risk, and so on.

2. Financial derivative instrument refers to a bilateral contract for payment according to a pre-agreed matter, and its contract** depends on or derives from the original financial instrument.

and its variations. FDIs are relative to the underlying financial instruments. These related or native financial instruments generally refer to **, bonds, certificates of deposit, currencies, etc.

Third, the "Interim Measures for the Management of Derivatives Trading Business of Banking Financial Institutions" lists four basic types of derivatives, namely forwards, **, swaps.

swaps) and options. Forward is a contract between the two parties to the transaction to buy and sell a certain amount of a certain underlying asset at a certain time in the future; **Generally refers to a commodity of interest.

or standardized forward contracts with financial assets as the subject matter; A swap is called a swap in China, which refers to the exchange of a series of cash flows between the two parties to a transaction within an agreed period of time according to agreed terms.

contracts; An option is a buying and selling option, and the buyer has the right to sell a certain underlying asset at a specific time or period in the future according to a prior agreement. ** The seller must perform the contract.

1. Forward contracts and ** contracts.

It is a form of transaction in which the two parties agree to buy and sell a specific quantity and quality of assets at a specific time in the future. The contract is a standardized contract formulated by the exchange, which makes unified provisions on the expiration date of the contract and the type, quantity and quality of the assets to be traded.

2. Swap contracts.

It is a contract signed by two parties to exchange a certain asset with each other at a certain period of time in the future. More precisely, he said, a swap contract is a contract between parties to exchange cash flows that they consider to be of equal economic value for a future period.

3. Options trading.

It is a transaction to buy and sell rights. The option contract stipulates the right to buy and sell a specific type, quantity and quality of the primary asset at a specific time and at a specific **. Options contracts are standardized on exchanges and over-the-counter.

Financial derivatives are financial instruments based on or derived from financial basic products (such as currencies, exchange rates, interest rates, ** indexes, etc.), and it is also derived from traditional financial products as financial products as the object of trading. Unlike other financial instruments, financial derivatives do not have value in themselves, and are derived from the value of currencies, exchange rates, etc., which can be traded using derivatives. The most commonly used derivatives in the international financial market are financial**, options and swaps (also known as swaps).

Financial derivatives refer to a bilateral contract intended to transfer risk to traders swap cash flows, common financial derivatives include forward contracts, ** contracts, option contracts, swaps, swaps, etc., financial derivatives also include hybrid financial instruments with one or more characteristics of forwards, **, swaps and options.

At this stage, there are many varieties of financial derivatives in the world, and in the trading of financial derivatives in China, financial derivatives mainly refer to the financial trading business centered on the first contract. Contracts can be divided into commodity contracts and financial contracts, commodity contracts mainly include crop products, non-ferrous metals, etc.; Financial contracts mainly include currency contracts, interest rate contracts and index contracts.

1.Forward contract: refers to a contract in which the two parties to the contract agree to buy and sell a certain amount of an underlying asset at a certain time in the future.

2.Contract: A standardized contract formulated by the exchange to deliver a certain quantity and quality of the subject matter at a specific time and place in the future.

3.Option contract: refers to the buyer of the option has the right to buy or sell a certain amount of the underlying asset according to the agreed ** within the agreed time or period, and sometimes can also waive the right to exercise this contract as needed.

4.Swap Contract: A swap contract is a contract entered into between parties to exchange cash flows that they believe to have equal economic value for a certain period of time in the future.

Financial derivatives, usually with the characteristics of replicability and leverage, are usually used to optimize resource allocation, capital hedging, risk transfer, and speculation. The value of a financial derivative depends on one or more of the underlying assets or indices.