Introduction to Derivative Financial Instruments, Chapter 3 - Strategic Use of DerivativesThis chapter comes from Derivative Financial Instruments, written by a renowned corporate financial advisor. This timely guide offers a comprehensive treatment of derivative financial instruments, fully covering bonds, interest swaps, options, futures, Forex, and more. The author explains the strategic use of derivatives, their place in portfolio management, hedging, and the importance of managing risk. |
Contents
| 53 | |
The Customization of Financial Products | 56 |
OvertheCounter Derivatives Transactions | 59 |
Risk Appetite and Risk Aversion | 63 |
Learning a Lesson from George Soros | 67 |
Learning a Lesson from Henry Kaufman | 69 |
High Technology for Processes and Products | 72 |
Common terms and phrases
3.2 Notional Principal APPETITE AND RISK assets bank’s bankers big banks Cisco commodity companies counterparty risk creative accounting credit derivatives credit risk cross-border Currency Products Currency swaps custom-made derivative customization of derivative derivative financial instruments derivative financial products derivative instruments derivative product’s price derivative products derivatives contracts end user’s Equity Derivatives European Central Bank exchange forward contracts Exchange-Traded expo exposure financial institution financial markets financial stability foreign currency foreign exchange forward Frank Partnoy GEORGE SOROS global growing risk appetite hedge funds hedging Chapter Henry Kaufman impact increase instance interbank Interest Rate Products investment investors LEARNING A LESSON LESSON FROM HENRY Liquidity risk LTCM partners market liquidity market risk market sentiment ment one’s options OTC derivatives OVER-THE-COUNTER DERIVATIVES TRANSACTIONS pension funds reader’s attention regulators regulatory rigorous risk management risk and return risk and reward risk aversion spikes in risk strategic swaps less systemic risk terparties tion underlying world’s