Suite101: Derivatives Investing Articles

• What are Credit Default Swaps?
  The credit crisis, fueled by the housing collapse, has something far more sinister twisted around the core of world financial markets - unfettered, opaque credit swaps.
• Derivatives Pricing Principles
  The process of pricing derivatives is best understood by examining certain fundamental principles.
• Derivative Markets Controversy
  Derivatives are complex financial instruments that can result in significant losses in the hands of investors who failed to understand them thoroughly.
• Rationale for Derivatives Markets
  Whether it is price discovery, risk management, or low transaction costs, derivative markets have a wide range of roles in social and economic systems worldwide.
• Contingent Claims
  Unlike forward commitments, where parties are obligated to complete a contract, contingent claims allow a party the flexibility of not engaging in the future transaction.
• Forward Commitments
  Derivatives act as insurance policies against losses, deriving offsetting returns from underlying assets. Examples of such "insurance policies" are forward commitments.