MANAGEMENT

Detailed explanation-1: -FOR RISK MANAGEMENT PURPOSES Derivative contracts, such as futures and forwards, options, swaps, and credit derivatives, allow a company to manage (or hedge) its exposure to interest rate, foreign exchange, credit risk or even catastrophic events such as hurricanes.

Detailed explanation-2: -Financial derivatives are financial instruments that are linked to a specific financial instrument or indicator or commodity, and through which specific financial risks can be traded in financial markets in their own right.

Detailed explanation-3: -Derivatives are financial instruments that have values derived from other assets like stocks, bonds, or foreign exchange. Derivatives are sometimes used to hedge a position (protecting against the risk of an adverse move in an asset) or to speculate on future moves in the underlying instrument.

Detailed explanation-4: -Financial risk is the type of risk that involves financial loss to a firm. Financial risks can be classified into various types such as Market risk, Credit risk, Liquidity risk and Operational risk.