LEARNING OBJECTIVES
After studying this chapter you will be able to get a grasp of the following:
- Derivatives in a financial instrument
- Various types of derivative contracts
- Definition of derivatives as per accounting standards
- Differences between US GAAP and IFRS pertaining to derivatives
- Difference between exchange-traded derivatives and over-the-counter derivatives
- Limitations of OTC derivatives
- Benefits of interest rate derivatives
- International Swaps and Derivatives Association
- Netting provisions of ISDA and its importance
- Different forms of interest rate derivatives
- Interest rate swaps
- Interest rate futures
- Caps and floors
- Collars and reverse collars
- Cross currency swaps
- Swaptions
- The status of various financial instruments for hedging purposes