deratives

NEED FOR DERATIVES PRICE RISK(UNSYSTEMATIC& SYSTEMATIC) LIQUIDITY RISK a COUNTERPARTY (CREDIT) RISK (ON THE BROKER &ON THE EXCHANGE) CASH OUT-FLOW RISK OPERATING RISK

A Derivative is an Instrument Whose Value Is Derived From the Value of One or More Underlying Which Can Be Commodities, Precious Metals, Currency, Bonds, Stocks, Stock Indices Etc. Four Most Common Examples of Derivative Instruments Are Forwards, Futures, Options and Swaps.