ABSTRACT
This chapter provides a good revision for readers who have pursued a course in financial derivatives in the past. It provides an introduction to financial derivative products and to their use in the practice of business risk management and investment. The chapter classifies the types of participants in derivatives markets according to their aims, the types of derivative products available, their specifications and provides a set of practical examples of their uses. Derivatives markets are instrumental in providing information also to society as a whole. The existence of organised derivatives markets increases trading interest and activity in both the derivatives market itself and in the cash market from which the derivative stems. The number of different derivative instruments and the volume of derivative contracts traded are both increasing dramatically over time. Organisations should therefore carefully examine their risk management procedures, including the role that derivatives play in the financial positions of companies.
