HO_MB3e_IM_Ch7

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1、Chapter7 DerivativesandDerivativeMarkets  99Chapter7DerivativesandDerivateMarketsn BriefChapterSummaryandLearningObjectives7.1Derivatives,Hedging,andSpeculating(pages213–214)Explainwhatderivativesareanddistinguishbetweenusingthemtohedgeandusingthemtospeculate.·Derivativesarefinanc

2、ialsecuritiesthatderivetheirvaluefromanunderlyingasset.·Animportantuseofderivativesistohedgeorreducerisk.·Derivativescanalsobeusedtospeculate,whichmeansplacingfinancialbetsonmovementsinassetprices.7.2ForwardContracts(pages214–215)Defineforwardcontractsandexplaintheroleofthesecontr

3、actsinthefinancialsystem·Forwardcontractsgivefirmsandinvestorsanopportunitytohedgetheriskontransactionsthatdependonfutureprices.7.3FuturesContracts(pages215–224)Explainhowfuturescontractscanbeusedtohedgeandtospeculate.·Hedginginvolvestakingashort(long)positioninthefuturesmarkettoo

4、ffsetalong(short)positioninthespotmarket.·Investorscanusecommodityfuturestospeculateonthepriceofacommodity.7.4Options(pages225–234)Distinguishbetweencalloptionsandputoptionsandexplainhowtheyareused.·Acalloptiongivesthebuyertherighttobuytheunderlyingassetatthestrikeprice(orexercise

5、price),atanytimeuptotheoption’sexpirationdate.·Aputoptiongivesthebuyertherighttoselltheunderlyingassetatthestrikeprice.·Firms,banks,andindividualinvestorscanuseoptionstohedgetheriskfromfluctuationsincommodityorstockprices,interestrates,andforeigncurrencyexchangerates.7.5Swaps(page

6、s234–239)Defineswapsandexplainhowswapscanbeusedtoreducerisk.·Aswapisanagreementbetweentwoormorecounterpartiestoexchangesetsofcashflowsoversomefutureperiod.·Firmsengageinswapstotransferrisktopartiesthataremorewillingtobearit.n KeyTermsCalloption,p.225.Atypeofderivativecontractthatg

7、ivesthebuyertherighttobuytheunderlyingassetatasetpriceduringasetperiodoftime.Counterpartyrisk,p.215.Theriskthatthecounterparty—thepersonorfirmontheothersideofthetransaction—willdefault.Creditdefaultswap,p.237.Aderivativethatrequiresthesellertomakepaymentstothebuyerifthepriceoftheu

8、nderlyingsecuritydeclinesinvalue;