Fundamentals of options and swaps and their linkages with risk management

Jecheche, Petros (2011) Fundamentals of options and swaps and their linkages with risk management.

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Official URL: http://hdl.handle.net/10646/1047

Abstract

Publisher's version available accessed from http://jupapadoc.startlogic.com/compresearch/papers/JCR12-2.pdf,This paper will attempt to discuss the main features and other basic facts of options and swaps and also their use as risk management tools. A number of diagrams have been drawn to vividly illustrate the key points of the arguments presented, especially on different option strategies used in options markets. Increased financial risk causes losses to otherwise profitable business organisations. Although a lot of people in general and investors in particular have become skeptical about financial derivatives, there is a general belief that where such financial instruments are used with great caution, a lot of benefits will be derived from their use, resulting in the maximization of shareholders’ wealth. This underlines the importance of options and swaps as risk management tools, especially to hedge against uncertainty. Derivatives provide an effective solution to the problem of risks caused by uncertainty and volatility in underlying assets. This article specifically analyses two types of derivatives which are options and swaps and how they can be used to mitigate against various types of risks to which organizations and markets are exposed. Keywords: Derivatives, Swaps, Options, Risk Management

Item Type: Article
Uncontrolled Keywords: Derivatives,Swaps,Options,Risk Management
Divisions: Universities > State Universities > University of Zimbabwe
Depositing User: Mr. Edmore Sibanda
Date Deposited: 30 Nov 2015 01:30
Last Modified: 30 Nov 2015 01:30
URI: http://researchdatabase.ac.zw/id/eprint/943

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