Volume : 3, Issue : 2, February - 2014

An Overview of Derivatives Instruments

Neeraj Kumar, Jasvinder Singh

Abstract :

Derivative as a financial contract or security deriving its value based on its relationship to, financial instrument (primitive security) or economic good (commodity).Derivatives generally fall into three oad categories options, futures and forwards, swaps Derivatives are generally used as an instrument to hedge risk, but can also be used for speculative purposes. To hedge this risk, the investor could purchase currency futures to lock in a specified exchange rate for the future stock sale and currency conversion. Derivatives are essential tools to determine both current and future prices.