Derivatives are financial instruments whose prices are derived from underlying assets such as stocks, interest rates, or commodities. There are several types of derivatives including options, futures, forwards, and swaps. Options give the holder the right but not the obligation to buy or sell the underlying asset. Futures and forwards are agreements to buy or sell an asset at a future date for a predetermined price. Swaps involve exchanging periodic payments between two parties based on interest rates, currencies, or other financial metrics. Derivatives can be used for hedging risk, speculation, and arbitrage opportunities.
Options are a type of derivative security. They are a derivative because the price of an option is intrinsically linked to the price of something else. Specifically, options are contracts that grant the right, but not the obligation to buy or sell an underlying asset at a set price on or before a certain date. The right to buy is called a call option and the right to sell is a put option. People somewhat familiar with derivatives may not see an obvious difference between this definition and what a future or forward contract does. The answer is that futures or forwards confer both the right and obligation to buy or sell at some point in the future. For example, somebody short a futures contract for cattle is obliged to deliver physical cows to a buyer unless they close out their positions before expiration. An options contract does not carry the same obligation, which is precisely why it is called an “option.”
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
Options are a type of derivative security. They are a derivative because the price of an option is intrinsically linked to the price of something else. Specifically, options are contracts that grant the right, but not the obligation to buy or sell an underlying asset at a set price on or before a certain date. The right to buy is called a call option and the right to sell is a put option. People somewhat familiar with derivatives may not see an obvious difference between this definition and what a future or forward contract does. The answer is that futures or forwards confer both the right and obligation to buy or sell at some point in the future. For example, somebody short a futures contract for cattle is obliged to deliver physical cows to a buyer unless they close out their positions before expiration. An options contract does not carry the same obligation, which is precisely why it is called an “option.”
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
How to get verified on Coinbase Account?_.docxBuy bitget
t's important to note that buying verified Coinbase accounts is not recommended and may violate Coinbase's terms of service. Instead of searching to "buy verified Coinbase accounts," follow the proper steps to verify your own account to ensure compliance and security.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
Introduction to Indian Financial System ()Avanish Goel
The financial system of a country is an important tool for economic development of the country, as it helps in creation of wealth by linking savings with investments.
It facilitates the flow of funds form the households (savers) to business firms (investors) to aid in wealth creation and development of both the parties
how to swap pi coins to foreign currency withdrawable.DOT TECH
As of my last update, Pi is still in the testing phase and is not tradable on any exchanges.
However, Pi Network has announced plans to launch its Testnet and Mainnet in the future, which may include listing Pi on exchanges.
The current method for selling pi coins involves exchanging them with a pi vendor who purchases pi coins for investment reasons.
If you want to sell your pi coins, reach out to a pi vendor and sell them to anyone looking to sell pi coins from any country around the globe.
Below is the contact information for my personal pi vendor.
Telegram: @Pi_vendor_247
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
3. What are the assets on which
their prices depend?
Underlying is financial in nature
Stock prices
Credit rating
Interest rates
Exchange rates
Also..
Electricity
The weather
Insurance
Cattle prices
In sum, if you can price the underlying asset, there can
always be a derivative on it.
4. Why are derivatives useful?
Hedging
Speculation
Arbitrage profit-making
Balance sheet changes
To change the nature of a liability
To change the nature of an
investment/assets
5. The various kinds of derivatives
There are three principal classes of
derivative securities:
Options
Futures and Forwards
Swaps
In addition, it is possible to have options
on futures, futures on options,
swaptions.. Infinite complexity.
6. Forward Contracts
An agreement to buy or sell an asset
at a certain time in the future for a
certain price
No daily settlement. When the
contract expires, one party buys the
asset for the agreed price from the
other party.
The contract is an over-the-counter
(OTC) agreement between 2
institutions.
7. 7
Profit from Forward Positions
Profit
Price of Underlying
at Maturity
Profit
Price of Underlying
at Maturity
Long position Short position
8. 8
Working of a forward contract
Exchange Rate
(INR/USD)
Bid Ask
Spot 39.94 40.11
1-month 39.78 40.02
3-month 39.55 39.94
9. 9
Working of a forward contract
Suppose Reliance has to make a
payment of $25 M to Total 3 months
from now and wish to lock in an
exchange rate.
They would enter a 3-month forward
contract to buy $ at the 3-month
forward exchange rate.
What happens if the exchange rate 3-
months from now is different from
39.55?
10. Futures Contracts
An agreement to buy or sell an
asset at a certain time in the future
for a certain price.
They are exchange-traded, and
hence, are standardized contracts.
Important futures exchanges:
CBOT, CME, NYMEX etc.
In India: BSE, NSE, MCX, NCDEX.
11. Examples of Futures Contracts
Agreement to:
Buy 1000 shares of Reliance at
Rs. 2500 in May (BSE)
Sell $1 million at 1.5000 US$/£
in april (CME)
12. Futures Arbitrage
Suppose that:
The spot price of Reliance is
Rs. 1500
The quoted 1-year futures
price is Rs. 2000
1-year interest rate is 10%
Is there an arbitrage
opportunity?
13. Futures Arbitrage
Solution:
Borrow Rs. 1500 at 10%
Go long spot
Short futures
End of year profit
= 2000 – 1500*(1+10%)
What if the futures price
is Rs. 1600?
14. Non-arbitrage futures price
If the spot price is S and futures price is F for a
contract deliverable in T years, then
F = S (1+r )T
If F > S (1+r )T, go short on futures and long
on spot and vice versa.
What is the value of the futures
contract?
15. Daily settlement and margins
Margin is cash or marketable
securities deposited by an investor
with the broker
Marking to market: Balance in the
margin account is adjusted to reflect
daily settlement
Margins guard against default
How are margins set?
16. Forward Contracts vs Futures
Contracts
Private contract between 2 parties Exchange traded
Non-standard contract Standard contract
Usually 1 specified delivery date Range of delivery dates
Settled at maturity Settled daily
Delivery or final cash
settlement usually occurs
Contract usually closed out
prior to maturity
FORWARDS FUTURES
17. Options
An option is a security that gives the holder the
right but not the obligation to buy or sell a
security for a specified price at a specified
date.
Basic classification of options:
Call options/Put options
American options/European options
How are options different from
futures/forwards?
18. Intrinsic and Time Value
Option premium = Intrinsic Value + Time Value
Intrinsic value: payoff if option is exercised
immediately, always greater than or equal to zero.
Usually the price of an option in the marketplace
will be greater than its intrinsic value. The
difference between the market value of an option
and its intrinsic value is called the time value of an
option.
What are in-the-money, out-of-the-money and
at-the-money options?
19. Long Call
Profit from buying European call option: option price =
$5, strike price = $100, option life = 2 months
30
20
10
0
-5
70 80 90 100
110 120 130
Profit ($)
Terminal
stock price ($)
20. Short Call
Profit from writing a European call option: option price =
$5, strike price = $100
-30
-20
-10
0
5
70 80 90 100
110 120 130
Profit ($)
Terminal
stock price ($)
21. Long Put
Profit from buying an European put option: option price
= $7, strike price = $70
30
20
10
0
-7
70
60
50
40 80 90 100
Profit ($)
Terminal
stock price ($)
22. Short Put
Profit from writing an European put option: option price
= $7, strike price = $70
-30
-20
-10
7
0
70
60
50
40
80 90 100
Profit ($)
Terminal
stock price ($)
23. Effect of Variables on Option
Pricing
c p C P
Variable
S0
X
T
r
D
+ + –
+
? ? + +
+ + + +
+ – + –
–
– – +
– + – +
• What is the relation between price of an American
option and a European option?
24. Put-Call Parity; No Dividends
Consider the following 2 portfolios:
Portfolio A: European call on a stock + PV of
the strike price in cash
Portfolio C: European put on the stock + the
stock
Both are worth Max (ST , X) at the maturity of the
options
They must therefore be worth the same today
This means that
c + Xe -rT = p + S0
25. Valuation using Black
Scholes equation
c S N d X e N d
p X e N d S N d
d
S X r T
T
d
S X r T
T
d T
rT
rT
0 1 2
2 0 1
1
0
2
0
1
2 2
2 2
where
( ) ( )
( ) ( )
ln( / ) ( / )
ln( / ) ( / )
•What happens if S is a) very large? b) very small?
26. What is Risk-Neutral
Valuation?
1. Assume that the expected
return from an asset is the
risk-free rate
2. Calculate the expected
payoff from the derivative
3. Discount at the risk-free
rate
27. Naked and Covered Positions
Naked position
Take no action
Covered position
Buy 100,000 shares today
Both strategies leave the bank
exposed to significant risk.
How?
28. Stop-Loss Strategy
This involves:
Buying 100,000 shares as soon
as price reaches $50
Selling 100,000 shares as soon
as price falls below $50
What is the problem with
this strategy?
29. The Greeks: Delta
Delta (D) is the rate of change of the
option price with respect to the underlying
Option
price
A
B
Slope = D
Stock price
30. Delta…
Delta = sensitivity of an option's theoretical
value to a change in the price of the underlying
contract.
delta = change in the option price
change in the stock price
What is the range of deltas for calls and
puts?
Why is delta also called the hedge ratio?
31. Theta
Theta (Q) is the rate of change of the value with respect
to time.
Gamma (G) is the rate of change of delta (D) with
respect to price of the underlying asset.
Vega (n) is the rate of change of the value of a
derivatives portfolio with respect to volatility.
Rho is the rate of change of the value of a derivative
with respect to the interest rate.
32. Managing Delta, Gamma, &
Vega
Delta, D, can be changed by
taking a position in the
underlying asset
To adjust gamma, G, and vega, n,
it is necessary to take a position
in an option or other derivative
33. Hedging in Practice
Traders usually ensure that their
portfolios are delta-neutral at least
once a day
Whenever the opportunity arises,
they improve gamma and vega
As portfolio becomes larger hedging
becomes less expensive
34. Exotic Options
Bermudan option - non-standard American option in which
early exercise is limited to certain dates during the life of
the option. Also referred to as "hybrid-style" exercise.
Forward start option is an option that is paid for now, but
does not begin until some later date.
Compound option is an option on an option. Compound
options have two strike prices and two expiration dates. For
example, a call on a call is purchased. At some specified
date in the future, a person will have the right but not the
obligation of purchasing a call option.
35. Exotic Options
Chooser option, also called an "as you like it" option, allows
the holder to choose after a specified period of time
whether the option is a call or a put.
Barrier option is an option in which the payoff depends on
whether the underlying asset's price reaches a certain level
during the life of the option.
Up-and-out option becomes worthless once the underlying asset price
reaches a specified boundary price.
Up-and-in option requires the underlying asset price to reach the
boundary price before the option can be activated.
Rainbow option is an option involving two or more risky
assets.
36. Exotic Options
Lookback option - payoffs depend on the maximum or
minimum the stock price reaches over the life of the option.
Asian option (average price option) - payoff depends on the
average price of the asset (not the stock price itself) over a
specified amount of time during the life of the option.
Spread option - strike price is the spread between two
underlying assets. For example, crack spreads on the
spread between the price of crude and its by-products.
Basket option - payoff depends upon a portfolio of assets.
37. Terms to watch out for
Volatility trading, correlation trading
Delta hedging, Gamma Hedging
Long, short, spread
Basis risk
Libor, yield curve
38. Butterfly Spread Using Calls
Butterfly Spread: buying a call option with a
relative low strike price, K1, buying a call option
with a relative high strike price. K3, and selling
two call options with a strike price halfway in
between, K2.
Stock price
Range
Payoff
from First
Long Call
Option
Payoff from
Second
Long Call
Option
Payoff from
Short Calls
Total Payoff
ST ≥ K3
K2 < ST < K3
K2 < ST < K3
ST ≤ K1
ST - K1
ST - K1
ST - K1
0
ST - K3
0
0
0
-2(ST - K2)
-2(ST - K2)
0
0
0
K3 - ST
ST - K1
0
39. Butterfly Spread Using Calls
Example: Call option prices on a $61 stock are: $10 for a $55
strike, $7 for a $60 strike, and $5 for a $65 strike. The investor
could create a butterfly spread by buying one call with $55 strike
price, buying a call with a $65 strike price, and selling two calls
with a $60 strike price.
Stock price
Range
Payoff
from First
Long Call
Option
Payoff from
Second
Long Call
Option
Payoff from
Short Calls
Total Payoff
ST ≥ $65
$60 < ST
<$65
$55 < ST
<$60
ST ≤ $55
ST - $55
ST - $55
ST - $55
0
ST - $65
0
0
0
-2(ST - $60)
-2(ST - $60)
0
0
0
$65 - ST
ST -$55
0
42. Introduction to financial
swaps
An asset-liability management technique which permits
a borrower (investor) to access one market and then
exchange the liability (asset) for another type of
liability (asset).
Swaps are not a funding instrument; they are a device
to obtain the desired form of financing indirectly which
otherwise might be inaccessible or too expensive.
Swaps may also be used purely for hedging purposes.
43. Major Types of Swap
Structures
Swaps involve exchange of a series of periodic
payments between two parties, usually through an
intermediary which is normally a large international
financial institution which runs a “swap book”.
The two major types are Interest Rate Swaps (also
known as Coupon Swaps) and Currency Swaps.
Major classification of swaps:
Liability swaps
Asset swaps
44. A Three Year Fixed-to-Floating Interest
Rate Swap
Notional principal P = $50 million
Trade Date : August 30, 2004
Effective Date : September 1, 2004
Fixed Rate : 9.5% p.a. payable semiannually, Actual/360
Floating Rate : 6 Month LIBOR
45. The fixed payments are as follows :
__________________________________________________
Payment Date Day Count Fraction Amount
__________________________________________________
1/3/2005 181/360 $2388194.40
1/9/2005 184/360 $2427777.80
1/3/2006 181/360 $2388194.40
1/9/2006 184/360 $2427777.80
1/3/2007 181/360 $2388194.40
1/9/2007 184/360 $2427777.80
46. Suppose the floating rates evolve as
follows :
Reset Date LIBOR (% p.a.)
30/8/2004 9.80
28/2/2005 9.20
30/8/2005 9.50
27/2/2006 8.90
30/8/2006 9.70
27/2/2007 10.20
47. This will give rise to the following
floating payments :
Payment Date Amount ($)
1/3/2005 2477222.20
1/9/2005 2351111.10
1/3/2006 2388194.40
1/9/2006 2274444.40
1/3/2007 2438472.20
1/9/2007 2606666.70
Normally, the payments would be netted out with only the net
payment being transferred from the deficit to the surplus party.
48. A TYPICAL USD IRS
A FIXED-TO-FLOATING INTEREST RATE SWAP
6.75% Fixed 6.5% fixed
Prime-25bp Prime-25bp
Prime+75bp 6.5% Fixed
To Floating to Fixed
Rate Lenders Rate Lenders
SWAP BANK
XYZ CORP. ABC BANK
49. Major Types of Swap
Structures
A number of variants of the standard structure are
found in practice
• Varying notional principal – Amortizing,
Accreting and Roller-Coaster Swaps
A Zero-Coupon Swap has only one fixed
payment at maturity
A Basis Swap involves an exchange of two
floating payments, each tied to a different
market index
In an Extendable Swap, one of the parties has
the option to extend the swap beyond the
scheduled termination date
Index maturity not equal to reset frequency
50. Major Types of Swap Structures
In a Forward Start Swap, the effective date is
several months even years after the trade date
so that a borrower with a future funding need
can take advantage of prevailing favourable
swap rates to lock in the terms of a swap to be
entered into at a later date
An Indexed Principal Swap is a variant in which the
principal is not fixed for the life of the swap but
tied to the level of interest rates - as rates
decline, the notional principal rises according to
some formula
In a Callable Swap the fixed rate payer has the
option to terminate the agreement prior to
scheduled maturity while in a Putable Swap the
fixed rate receiver has such an option
52. Credit Default Swaps
Bond 1
Bond 2
Bond 3
…
Bond n
Trust
Tranche 1
1st 5% of loss
35% return
Tranche 2
2nd 10% of loss
15% return
Tranche 3
Residual loss
6% return