Derivatives and Options Assignment Help

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Derivatives are financial instruments which are valued on the basis of one or more underlying entities. Some examples of such an underlying are assets, indexes, interest rates etc. The reason for the correlation between the value of a derivative and an underlying entity is that derivatives have no actual value of their own. Their value is relative to the particular financial dynamic environment that they are a part of. Derivatives are usually provided in the form of a contract. This contract stipulates the conditions under which the financial transactions between two parties are to be conducted. Forwards, futures, options, and swaps are the most common types of derivatives with the most common types of underlying assets being commodities, stocks, bonds, interest rates and currencies. An option is a derivative financial instrument that specifies a contract between two parties future transaction on an asset at a reference price. Most developed countries provide special legal exemptions to derivatives and hence they’re popular means of extending credit. Derivatives are used for making market speculations. They offer the chance of making profit in the event that the value of the underlying asset moves in the direction speculated by the investor. Derivatives are also used for mitigating the risk involved with a financial investment by establishing a contract that moves in the opposite direction to that of the investment, thus reducing the risk involved with it. Another use of derivatives is that they provide leverage for movement in the underlying asset which in turn can produce a large difference in the eventual value of the derivative. The nature of use that they are intended for would determine the type of derivative. There are two kinds of derivatives – Over the counter derivatives and exchange traded derivative contracts. Options can be of both types and also of different types and styles depending upon their intended purpose and market in which they’re applied. The analysis and evaluation of derivatives and options in particular can be extremely complex and challenging. There are numerous models used of valuating options and students are not likely to be capable of applying or even understanding them all. If you need derivatives and options assignment help then contact us at the finance assignment help site.

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