BANKING AFFAIRS

Detailed explanation-1: -Markets in which derivatives are traded are classified as derivative securities markets. Derivative Securities Markets. Derivative securities (also called derivatives) are financial contracts whose values are derived from the values of underlying financial assets (such as securities).

Detailed explanation-2: -The main types of derivatives are futures, forwards, options, and swaps. An example of a derivative security is a convertible bond.

Detailed explanation-3: -The four major types of derivative contracts are options, forwards, futures and swaps. Options: Options are derivative contracts that give the buyer a right to buy/sell the underlying asset at the specified price during a certain period of time. The buyer is not under any obligation to exercise the option.

Detailed explanation-4: -These financial securities are commonly used to access certain markets and may be traded to hedge against risk. Derivatives can be used to either mitigate risk (hedging) or assume risk with the expectation of commensurate reward (speculation).