Derivatives MK, Unit 18. Watch the video and take notes What is a derivative? What is the underlying? How can derivatives be used? Why are they dangerous?

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Presentation transcript:

Derivatives MK, Unit 18

Watch the video and take notes What is a derivative? What is the underlying? How can derivatives be used? Why are they dangerous? What are the 4 types of derivatives? g404 (kanjohvideo: Introduction to Financial Derivatives) g404

Make slides for a presentation on derivatives with the help of the reading on the handout. Include the following topics: Definition Where are they traded? What are they used for? Types of derivatives

Possible slides:

Definition derivative: financial instruments whose price is derived from / dependent upon the value of an underlying asset. derive (derives, deriving, derived): to obtain sg from sg else When buying/selling a derivative you buy/sell the right to do something (buy a commodity, pay in a different currency, etc.)

Traded Over-the-counter (OTC): bigger, less safe Stock exchanges: smaller, more secure due to clearing houses

Used for: hedging: protection against price changes (“insurance”) speculation: buying or selling assets, hoping to make a profit in the future (“betting”) “Financial weapons of mass destruction”? (Warren Buffett)

Main types of derivatives: futures forwards options swaps

Watch and take notes Futures contracts AtReo (graphitishow: What are Derivatives?) AtReo Now fill in the gaps on your handout