1. Derivatives MK, Unit 18

2. 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? https://www.youtube.com/watch?v=yTxxSTX g404 (kanjohvideo: Introduction to Financial Derivatives) https://www.youtube.com/watch?v=yTxxSTX g404

3. 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

4. Possible slides:

5. 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.)

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

7. 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)

8. Main types of derivatives: futures forwards options swaps

9. Watch and take notes Futures contracts https://www.youtube.com/watch?v=FLGRPY AtReo (graphitishow: What are Derivatives?) https://www.youtube.com/watch?v=FLGRPY AtReo Now fill in the gaps on your handout