Cryptocurrency Q&A
Who creates derivatives?
Who creates derivatives?
NebulaPulse
Wed Jun 05 2024
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7 answers
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Could you please elaborate on the question, "Who creates derivatives?" I'm curious to understand the parties involved in the creation process. Are derivatives primarily created by financial institutions like banks and investment firms? Or, do individuals also have a role in their creation? Furthermore, are there specific qualifications or licenses required for those involved in derivative creation? It would also be interesting to know about the motivations behind creating derivatives and how this affects the overall financial market. Could you provide some insights into these aspects?
7 answers
JejuJoy
Fri Jun 07 2024
SWAPS are agreements between two parties to exchange cash flows based on the performance of an underlying asset. These derivatives are often used to manage risk or adjust the characteristics of an investment portfolio.
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Tommaso
Fri Jun 07 2024
Futures contracts are agreements to buy or sell an asset at a specific price on a future date. They provide investors with a way to lock in prices and hedge against potential market fluctuations.
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Daniela
Fri Jun 07 2024
Forwards, on the other hand, are customized contracts between two parties to exchange an asset at a future date and price. These contracts are not traded on exchanges but are rather arranged over the counter.
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Daniele
Fri Jun 07 2024
Derivatives are financial instruments that derive their value from an underlying asset or benchmark. These securities offer investors exposure to various markets without necessarily owning the underlying asset.
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Skywalker
Fri Jun 07 2024
Options give investors the right, but not the obligation, to buy or sell an asset at a specified price within a certain time frame. They provide flexibility and allow investors to hedge or speculate based on their market views.
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