Financial Derivatives Project Report

Derivatives are a type of financial instrument that few of us understand and fewer still fully appreciate, although many of us have invested indirectly in derivatives by purchasing mutual funds or participating in a pension plan whose underlying assets include derivative products. In a way, derivatives are like electricity. Properly used, they can provide great benefit. If they are mishandled or misunderstood, the results can be catastrophic. Derivatives are not inherently “bad”. When there is full understanding of these instruments and responsible management of the risks, financial derivatives can be useful tools in pursuing an investment strategy. This project attempts to familiarize with financial derivatives, their use and the need to appreciate and manage risk.

1. Acknowledgement
2. Preface
3. Introduction
– What is a derivative
4. History of Derivatives
5. Characteristics of derivatives
6. Types of derivatives
7. Forward contract
8. Future contract
9. Swaps
10. Options
11. Function of derivatives
12. Advantages of Derivatives
13. Disadvantages of derivatives
14. Risks associated with derivatives
15. Derivatives in Indian Market
16. How derivatives are actually traded
17. How derivatives are traded in Indian
18. Capital market
19. Recommendations
20. Annexures

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