Financial Instruments

       Exercises

      Answer the questions:

1. How can you define a financial derivative?
2. What are the major types of derivatives?
3. What is the main difference between forward and future contracts?
4. Can you give an example of hybrid derivatives?
5. Is there any connection between banking sector and financial instruments market?

      True/false statements

1. Financial instrument can be defined as a real or virtual document representing a legal agreement and does not involve any sort of monetary value.F
2. Financial instruments’ market involves derivatives’ market.T
3. The history of derivatives started in the USA in the 1930s.F
4. The key types of derivatives are futures, forwards, options and swaps. T
5. The most common example of hybrid derivatives is a forward.F
6. Financial instruments are rarely used by modern commercial banks.F
7. Corporate-wide management and controlling of counter party and market risks today are arising from financial instruments. T

      Literature 

      An Introduction to Derivatives (Reuters Financial Training Series). Publisher: John Wiley & Sons. Published: 2006.

      Chance, Don M. "A Chronology of Derivatives." Derivatives Quarterly 2 (Winter, 2003), 53-60.

      Jowett B., vol. 2, The Great Books of the Western World, ed. Robert Maynard Hutchins (Chicago: University of Chicago Press, 1997), book 1, chap. 11, p. 453.

      Options, Futures and Other Derivatives by John C. Hull. Publisher: Pearson Higher Education. Published: 2002. Edition: 5th

      Options as a Strategic Investment by Lawrence McMillan. Publisher: NYIF. Published: 2004. Edition: 6^th

      Siems T., "Financial Derivatives: Are New Regulations Warranted?" Financial Industry Studies, Federal Reserve Bank of Dallas, August 2003.