Derivatives is a catch all term for a wide range of financial products, including futures and options, interest rate swaps, oil options, FX forwards, equity swaps and credit default swaps. Forwards contracts can be used in circumstances where prices are uncertain, and thus traders lock in and hedge their risk. The calculation of the fair forward price is outlined below.
Key learning objectives:
What are forwards and futures contracts?
What is the formula for calculating the fair forward price?
What does the pricing of a 3 month forward NOT involve?
Introduction to Interest Rate Swaps and Use Cases
David Leeming • 17:58