Forwards, futures, and swaps are contractual agreements that establish transactions to be executed at a future date. Advantages of these contracts (derivatives) over owning the underlying asset include substantively lower transaction costs, and the possibility of circumventing trading...

Derivatives are financial instruments used to manage risk. They consist of contractual agreements that establish transactions to be executed at a future date. The value of such transactions derive from the price of underlying assets, such as bonds, stocks, commodities, or currencies, explaining...