Introducción - Derivados

A derivative is best described as a financial instrument that derives its performance by:

• Passing through the returns of the underlying

• Replicating the performance of the underlying

• Transforming the performance of the underlying

Compared with the underlying spot market, derivative markets are most likely to have:

• Greater liquidity

• Higher transaction costs

• Higher capital requirements

Compared with exchange-traded derivatives, over-the-counter derivatives would most likely be described as:

• Standardized.

• Less transparent.

• More transparent.

In contrast to a forward contract, a futures contract:

• Trades over-the-counter

• Is initiated at a zero value

• Is marked-to-market daily