In futures markets, the contracts have standardized terms and trade in a market that provides sufficient liquidity to permit the parties to enter the market and offset transactions previously created. The use of contracts with standardized terms results in relatively widespread acceptance of these terms as homogeneous agreed-upon standards for trading these contracts. For example, [...]

In this post, we take a brief look at the different types of derivative contracts. This brief treatment serves only as a short introduction to familiarize you with the general ideas behind the contracts. Let us start by noting that derivative contracts are created on and traded in two distinct but related types of markets: [...]

The concept of risk is at the heart of investment management. Financial analysts and portfolio managers continually identify, measure, and manage risk. In a simple world where only stocks and bonds exist, the only risks are the fluctuations associated with market values and the potential for a creditor to default. Measuring risk often takes the [...]