Derivatives, Futures options ,forwards, swap ,ALM
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for VIDEO LECTURES OF ASHISH SIR (FOR ALL SCALES) — Bank Promotions.
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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.
How does a futures contract differ from a forward contract?
A futures contract is a standardised agreement traded on a recognised exchange with daily mark-to-market settlement and margin requirements, unlike a forward which is OTC, customised, and settled only at maturity.
What is an 'out-of-the-money' put option?
A put option where strike price is below the current market price.
What is the role of a clearing house in futures trading?
The clearing house acts as a central counterparty to both buyer and seller in futures transactions, guaranteeing settlement and eliminating counterparty risk by collecting margins and performing daily mark-to-market.
What is the strike price of an option?
The predetermined price at which the option can be exercised.
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