BENEFITS OF FINANCIAL DERIVATIVES
Aleksandra Stankovska () and
Savica Dimitrieska ()
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Aleksandra Stankovska: European University – Republic of Macedonia, Skopje
Savica Dimitrieska: European University – Republic of Macedonia, Skopje
Economics and Management, 2017, vol. 13, issue 1, 27-37
This paper presents an aggregated picture of financial derivatives industry activity, illustrating key trends, speculation, hedging and risk management. Derivatives are financial contracts that are designed to create market price exposure to changes in an underlying commodity, assets or event. The use of derivative instruments in corporate risk management has grown rapidly in recent years, caused partly by financial deregulation and partly by the success of the financial industry in designing a great variety of OTC and exchange-traded contracts. The innovation and growth of derivative instruments was the result of satisfaction of demand of market players for a means to hedge price risk. Derivatives have become an integral part of the financial markets because they can serve several economic functions. Derivatives can serve as investment vehicles and can provide a way to make bets that are highly leveraged and tailored to a specific view.
Keywords: financial derivatives; speculation; hedging & risk management (search for similar items in EconPapers)
JEL-codes: E44 G1 G18 (search for similar items in EconPapers)
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Persistent link: https://EconPapers.repec.org/RePEc:neo:journl:v:13:y:2017:i:1:p:27-37
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