The Economics of Financial Derivative Instruments

NWAOBI, GODWIN C (2008): The Economics of Financial Derivative Instruments.

Abstract

The phenomenal growth of derivative markets across the globe indicates their impact on the global financial scene. As the securities markets continue to evolve, market participants, investors and regulators are looking at different way in which the risk management and hedging needs of investors may be effectively met through the derivative instruments. However, it is equally recognised that derivative markets present market participants and regulators with different and complex regulatory(control) issues, which must be adequately addressed if derivative markets are to gain and maitain investor confidence. And yet, more and more companies are using(or being forced to use) futures and derivatives to stay competitive in a fast-changing world characterised by both unprecedented opportunities and unprecedented risks. Thus, the thrust of this paper is to provide a detailed study of the manner in which the market works and how the knowledge can be used to make profits and avoid losses in a competitive economy setting.

• Item Type: MPRA Paper
• Language: English
• Keywords: derivatives,futures,options, commodities, OTC,assets, stocks, indexes, swaps, instruments,foreignexchange, forex, hedging, spot,markets,arbitrage, risk, exchanges, brokers, storage, economies, financial, prices
• Subjects: G - Financial Economics > G1 - General Financial Markets > G11 - Portfolio Choice ; Investment Decisions; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E44 - Financial Markets and the Macroeconomy; G - Financial Economics > G2 - Financial Institutions and Services > G24 - Investment Banking ; Venture Capital ; Brokerage ; Ratings and Ratings Agencies; G - Financial Economics > G1 - General Financial Markets > G13 - Contingent Pricing ; Futures Pricing; M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M0 - General; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D53 - Financial Markets; G - Financial Economics > G1 - General Financial Markets > G15 - International Financial Markets; F - International Economics > F3 - International Finance > F31 - Foreign Exchange

References

http://www.quanterb.org