Financial Derivative module notes including futures, options, forwards, rate swaps. Pricing structures for options including Binomial pricing model and Black Scholes model.
No guarantees of a particular grade are provided with the purchase of these notes, but I personally got 95% on this exam us...
A matrix is a rectangular array of numbers, called elements. The matrix itself is
denoted by a boldface letter. When specific numbers are not used, the elements
are denoted by italicised lower-case letters, having a double subscript.
Matrices having a single row are referred to as row vectors; matrices having a single
column are referred to as column vectors. Vectors of either type are usually denoted
by lower-case boldface letters.
If the determinant of A is zero, then A is said to be singular. If the determinant of
A is not zero, then A is called nonsingular
2 Introduction
2.1 Exchange Traded Markets
A derivatives exchange is a market where individuals trade standardised contracts
that have been defined by the exchange. Initially their main task was to standardise
the quantities and qualities of the grains that were traded. Traditionally derivatives
exchanges have used what is known as the open outcry system, a system of in per-
son communication on the trading floor using hand signals. This has been replaced
by an electronic system.
Derivatives
A derivative security is a financial security whose value depends on (or derives
from) other, more fundamental, underlying financial variables such as the price of
a stock, an interest rate, an index level, a commodity price or an exchange rate. It
is a contract or contingent claim between two parties that specifies conditions, i.e.
dates and values of the underlying variables, that trigger the payoffs and payments
made between the parties.
Over-the-counter Markets
OTC markets are not over the exchange transactions, they are done over a com-
puter network of dealers. Trades are done over the phone and are usually between
two financial institutions or between a financial institution and one of its clients.
Page 4
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller stuvia48392e. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £7.49. You're not tied to anything after your purchase.
