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Derivatives




Cash-Settled Swap


A swap (usually a commodity swap) in which two counterparties agree a price and a quantity of an underlying asset today, with reference to a specific benchmark index as published at a preset date in the future. If the benchmark index at that future date turns out to be higher (lower) than the agreed price, then the seller (buyer) pays the buyer (seller) the difference between the two prices, multiplied by the predetermined quantity.



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Derivatives have increasingly become very important tools in finance over the last three decades. Many different types of derivatives are now traded actively on ...
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