Here, we represent the derivative of a function by a prime symbol For example, writing ? represents the derivative of the function evaluated at point
Examples of underlying assets are stocks, bonds, and commodities There are four main reasons for the use of derivatives The first is risk management When
Definition of Derivative • 6 Example • 7 Extension of the idea • 8 Example • 9 Derivative as a Function • 10 Rules of Differentiation
Fortunately, we can develop a small collection of examples and rules that allow us to compute the derivative of almost any function we are likely to
Such a transaction is an example of a derivative The price of In the class of equity derivatives the world over, futures and options on stock
For example, banks often offer more favourable financing terms to those firms that have reduced their market risks through hedging activities than to those
A derivative is a financial instrument or contract that derives its value from an underlying asset For example, a wheat farmer may wish to contract to
Financial derivatives contracts are usually settled by net payments of cash, often For example, the counter party to a derivative contract that
The main types of derivatives are futures, forwards, options, and swaps An example of a derivative security is a convertible bond Such a bond, at the
For example, gold is widely considered a good investment to hedge against stocks and currencies When the stock market as a whole isn't performing well, or
It does not own any shares or index futures or commodities which might be traded on the exchange For example, an exchange where gold futures are traded
2 Example Find the derivative of f(x) = 3 / tan 5x + 1 Page 6 Summary of derivative rules Tables Examples
Examples are bonds that are convertible into shares and securities that carry the option of repaying the principal in a different currency from that of issuance