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What type of derivative instrument is a forward-based contract in which two parties agree to exchange streams of payments for a specified period of time?
A forward-based contract in which two parties agree to exchange streams of payments for a specified period of time is known as a "swap." Swaps are derivative instruments that typically involve the exchange of cash flows, which can be based on interest rates, currencies, or commodities. These agreements allow parties to hedge risk or speculate on changes in market conditions over the contract's duration.
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What is a credit risk when entering into a derivative contract?
Credit Risk. Credit risk or default risk evolves from the possibility that one of the parties to a derivative contract will not satisfy its financial obligations under the derivative contract.
What is a derivative financially speaking Brightbridge Wealth Management asks?
A derivative is a contract with financial performance that is derived from the performance of something else. That "something else" is an underlying asset commonly termed "the underlying" and may be another financial instrument, another derivative, or an index of some kind.
Is a mortgage a negotiable instrument?
No, a mortgage is a contract.
What is the point of a stock option loan?
Well a stock option loan is an derivative financial instrument that specifies a contract between two parties for a furture transaction on an asset at a reference price. The buyer of the option gains the right, but not the obligation, to engage in that transaction, while the seller incurs the corresponding obligation to fulfill the transaction.
How many house payments can one miss before being foreclosed?
If it is not specified in the contract then it is likely at the descretion of the lender.
What is a forwardbased contract?
A forwardbased contract obligates one party to buy and a counterparty to sell an underlying asset, such as foreign currency or a commodity, with equal risk at a future date at an agreed-on price.
What is an embedded derivative?
A component of a hybrid security that is embedded in a non-derivative instrument. An embedded derivative can modify the cash flows of the host contract because the derivative can be related to an exchange rate, commodity price or some other variable which frequently changes. For example, a Canadian company might enter into a sales contract with a Chinese company, creating a host contract. If the contract is denominated in a foreign currency, such as the U.S. dollar, an embedded foreign currency derivative is created. According to the International Financial Reporting Standards (IFRS), the embedded derivative has to be separated from the host contract and accounted for separately unless the economic and risk characteristics of both the embedded derivative and host contract are closely related.
What is a credit risk when entering into a derivative contract?
Credit Risk. Credit risk or default risk evolves from the possibility that one of the parties to a derivative contract will not satisfy its financial obligations under the derivative contract.
What is a derivative financially speaking Brightbridge Wealth Management asks?
A derivative is a contract with financial performance that is derived from the performance of something else. That "something else" is an underlying asset commonly termed "the underlying" and may be another financial instrument, another derivative, or an index of some kind.
What is an option based contract?
Provide the holder with a right, but not an obligation to buy or sell an underlying financial instrument, foreign currency, or commodity at an agreed-on price during a specified time period or at a specified date.
When is a contract breeched?
when the condition specified in the contract are not followed then the contract is said to be breached.
What is a basic risk when entering into a derivative contract?
Basis Risk. This is the spot (cash) price of the underlying asset being hedged, less the price of the derivative contract used to hedge the asset.
Is a mortgage a negotiable instrument?
No, a mortgage is a contract.
What is a contract to use something for a specified period of time?
A Lease
Can you enforce a contract without term of duration?
Yes,because there is specified time for each of contract in the book of law
When is a contract option may be exercised?
you can put obtion when you see the flacuaton in rapid market.
How many bushels of wheat in a futures contract?
A wheat futures contract covers 5000 bushels of whatever wheat (there are different kinds) is specified in the contract.
