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DERIVATIVE MARKETS
What is a derivative instrument in financial markets?
A derivative is a financial contract whose value is derived from an underlying asset such as stocks, bonds, commodities, currencies, interest rates, or market indices.
What is a swap contract in derivative markets?
Agreement to exchange cash flows between two parties over time.
What are the four main types of derivative contracts?
The four main types are forwards, futures, options, and swaps.
What is a 'notional principal' in a swap agreement?
Reference amount on which swap payments are calculated, not exchanged.
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