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Benefits Of Financial Derivatives

Author

Listed:
  • ALEKSANDRA STANKOVSKA

    (European University – Republic of Macedonia, Skopje)

  • SAVICA DIMITRIESKA

    (European University – Republic of Macedonia, Skopje)

Abstract

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.

Suggested Citation

  • Aleksandra Stankovska & Savica Dimitrieska, 2017. "Benefits Of Financial Derivatives," Economics and Management, Faculty of Economics, SOUTH-WEST UNIVERSITY "NEOFIT RILSKI", BLAGOEVGRAD, vol. 13(1), pages 27-37.
    • Handle: RePEc:neo:journl:v:13:y:2017:i:1:p:27-37
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    References listed on IDEAS

    as
    1. repec:cup:jfinqa:v:46:y:2011:i:06:p:1727-1754_00 is not listed on IDEAS
    2. Chernenko, Sergey & Faulkender, Michael, 2011. "The Two Sides of Derivatives Usage: Hedging and Speculating with Interest Rate Swaps," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 46(6), pages 1727-1754, December.
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    More about this item

    Keywords

    financial derivatives; speculation; hedging & risk management;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G1 - Financial Economics - - General Financial Markets
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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