Explore BrainMass

Explore BrainMass

    Traditional Financial and Derivative Financial Instruments

    Not what you're looking for? Search our solutions OR ask your own Custom question.

    This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

    What is meant by the term underlying as it relates to derivative financial instruments?

    What are the main distinctions between a traditional financial instrument and a derivative financial instrument?

    © BrainMass Inc. brainmass.com March 6, 2023, 3:39 pm ad1c9bdddf

    Solution Preview

    Derivative financial instruments are financial contracts whose values depend on the value of an underlying asset, such as an interest rate, foreign exchange rate, credit spreads, commodities and equity, reference rates, or index. The biggest thing about derivatives is that they enable their users to hedge or alter market and credit ...

    Solution Summary

    This solution discusses traditional and derivative financial instruments.