O'Reilly logo

The Forex Edge by James Dicks

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

CHAPTER 6FORWARDS AND SWAPS

Among several other interesting financial derivatives (so-called because their value is based upon the value of an underlying asset) that allow investors to manage and reduce their portfolio risks, we can find forwards and swaps.

These are linear payoff derivatives contracts, contrary to options, which have a nonlinear payoff. Forwards and swaps are OTC instruments, thus operating in a nonregulated market and requiring customers to have a banking relationship.

DEFINITIONS

A forward is any contract in which liquidation is deferred to a posterior date, defined on the negotiation. Forward transactions are one of the most common derivatives employed in all kinds of financial activities.

This type of contract allows you ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required