Chapter-28-Introduction to Derivatives

 28.a: Define derivatives, describe features and uses of derivatives and compare linear and non-linear derivatives

28.b: Describe exchange-traded and over-the-counter markets, and evaluate the advantages and disadvantages of each.

28.c: Differentiate between options, forwards and futures contracts

28.d: Identify and calculate option and forward contract payoffs

28.e: Differentiate among the broad categories of traders: hedgers, speculators and arbitrageurs

28.f: Calculate and compare the payoffs from hedging strategies involving forward contracts and options

28.g: Calculate and compare the payoffs from speculative strategies involving futures and options

28.h: Calculate an arbitrage payoff and describe how arbitrage opportunities are temporary

28.i: Describe some of the risks that can arise from the use of derivatives

28. Key Concepts