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Derivatives, Futures options ,forwards, swap ,ALM
What is a derivative instrument in the context of banking?
A derivative is a financial contract whose value is derived from an underlying asset such as interest rates, currencies, commodities, or equity indices. Banks use derivatives for hedging risk or speculative purposes.
What is a futures contract's expiry cycle in Indian financial markets?
Futures typically expire on the last Thursday of each month.
What is a forward contract?
A forward contract is a customised, over-the-counter (OTC) agreement between two parties to buy or sell an asset at a predetermined price on a specified future date. It is not traded on an exchange and carries counterparty risk.
What is the premium in an options contract?
The price paid by the buyer to acquire the option right.
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