This well-written chapter effectively introduces the basic derivative instruments - forward contracts, call options and put options - and will be valuable to anyone looking to gain a basic understanding of these products. The mechanics, characteristics, terminology and payoff and profit diagrams (from the perspective of both the buyer ... click here for more details.
This chapter will be useful to anyone looking for an introduction to commodity forwards and futures market. The relationship between the dividend yield in the financial forwards and futures markets and the lease rate in commodity forwards and futures markets is well explained, as are the particular issues of ... click here for more details.
Tolstoy observed that happy families are all alike; each unhappy family is unhappy in its
ownway. An analogous idea in financial markets is that financial forwards are all alike; each
commodity, however, has unique economic characteristics that determine forward pricing in
that market. In this chapter we will see the extent to which ... click here for more details.
Forward contracts—which permit firms and investors to guarantee a price for a future
purchase or sale—are a basic financial risk management tool. In this chapter we continue
to explore these contracts and study in detail forward and futures contracts on financial
instruments, such as stocks, indexes, currencies, and interest rates. Our objectives are ... click here for more details.
This chapter will be valuable to anyone interested in understanding how and why forwards, call options and put options are used to achieve a desired payoff, and in particular how the use of options can be viewed as buying and selling insurance. Specific option strategies such as spreads, straddles ... click here for more details.
Thus far we have primarily discussed financial assets, but many of the most important
decisions that firms make concern real assets, a term that broadly encompasses factories,
mines, office buildings, research and development, and other nonfinancial firm assets. In
this chapter we will see that it is possible to analyze investment and operating ... click here for more details.
Thus far we have talked about derivatives contracts that settle on a single date. A forward
contract, for example, fixes a price for a transaction that will occur on a specific date
in the future. However, many transactions occur repeatedly. Firms that issue bonds make
periodic coupon payments. Multinational firms frequently exchange currencies. ... click here for more details.