An illiquid option is a contract for which there is no secondary market, i.e., it is not tradable on an...

Investors using futures contracts must post margin (in the form of cash or marketable securities) in an account maintained by...

Convertible bonds are typically embedded with specific types of derivatives (call, put, and swap). From an equity investor’s perspective, a...

The day-count convention for CDS spreads is actual/ 360 (similar to floating legs of interest-rate swap). The actual/ 360 Is...

The most widely used underlying variables in derivatives are stock prices, stock indexes, commodity prices, exchanges rates, and interest rates....

Characteristically, derivatives have one advantage over stocks and bonds even though at higher price volatility (and hence higher risk). The...

A money market derivative is a short-term interest rate derivative used in money market trading and hedging. It allows market...

A swap rate is the market rate on the fixed-rate leg of a swap. This rate is paid by the...

A credit derivative is a tool designed to transfer credit risk between two parties: a credit risk seller and a...

Futures contracts are sometimes used to alter the beta of a portfolio which has been reduced to zero (in order...