This is “Financial Derivatives”, chapter 12 from the book Finance, Banking, and Money (v. 2.0). For details on it (including licensing), click here.

For more information on the source of this book, or why it is available for free, please see the project's home page. You can browse or download additional books there. To download a .zip file containing this book to use offline, simply click here.

Has this book helped you? Consider passing it on:
Creative Commons supports free culture from music to education. Their licenses helped make this book available to you. helps people like you help teachers fund their classroom projects, from art supplies to books to calculators.

Chapter 12 Financial Derivatives

Chapter Objectives

By the end of this chapter, students should be able to:

  1. Define financial derivative and explain the economic functions that financial derivatives fulfill.
  2. Define and describe the four major types of derivatives: forwards, futures, options, and swaps.
  3. Explain the economic functions of hedging and speculating.