Important Points for IC 99 - Asset Management Exam
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There are two classes of derivative contracts : Privately traded or OTC derivatives such as Forward Contracts, Swaps, FRA that do not go through an exchange or other intermediary, and - Exchange-Traded derivatives (ETD) that are traded through specialised derivative exchanges or other exchanges.
In case of a derivative, the underlying assets could be : Stock (futures) - Currencies (dollar futures) - Stock Index, and Futures on Sensex - Commodity (oil futures) - Interest bearing instruments (T-Bills Futures) or - Weather derivatives
Forward contract is a cash market transaction in which delivery of the instrument is deferred until the contract has been made. Although the delivery of instrument is made in the future, the price is determined on the initial trade date.
The three major players in the financial derivatives trading are hedgers, speculators, arbitrageurs.
Hedge funds, including fund of funds are unregistered private investment partnerships, funds or pools that may invest and trade in many different markets, strategies and instruments.
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