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DERIVATIVES PRODUCTS
What is a derivative product in the context of financial markets?
A derivative is a financial instrument whose value is derived from an underlying asset such as interest rates, currencies, equities, or commodities. It is used for hedging risk or speculation.
What is a 'cap' in interest rate derivatives?
A cap limits maximum interest rate a borrower pays.
What are the four main types of derivative instruments used in treasury management?
The four main types are forwards, futures, options, and swaps. Each serves distinct hedging or speculative purposes in treasury operations.
What is a 'floor' in interest rate derivatives?
A floor sets minimum interest rate received by a lender.
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