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 November 30, 2021, 2:11 am ad1c9bdddf
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 ...
This solution discusses traditional and derivative financial instruments.