Papers on "Derivatives" and similar term paper topics

Paper #068291 :: Derivatives
Buy and instantly download this paper now

This paper analyzes the various methods in which derivatives are used in the areas of business and finance.

Written in 2006; 2,449 words; 4 sources; APA; $ 74.95

Paper Summary:

The writer of this paper defines a derivative as a contract that specifies the rights and obligations between the issuer of the security and the holder, to receive or deliver future cash flows based on some future event. This paper examines the various uses for derivatives which are standardized much the same as stock futures and traded through a securities exchange or futures exchange. This paper discusses the use of derivative securities as a tool to transfer risk. For example, a business can sell futures contracts on a product to a buyer, even before that particular item hits the shelf. The writer cites the various types of derivative options, such as the swap and the forward contract, which is an agreement between two parties to buy or sell a particular asset. A swap is an agreement in which, generally two, parties agree to exchange future cash flows, arising from financial instruments. This paper details how forward contracts are implemented in the corporate business world, as was the case with Lufthansa, who contracted with Boeing to purchase aircraft in the mid-1980s. This paper delves into the process known as financial engineering, which combines options and other derivatives while at the same time controlling the risk in a given transaction. This paper also discusses how derivatives are used as an option in tax planning.

From the Paper:

"A common use of options for tax planing involves the deferrment of a gain from one period to another, thereby delaying the payment of taxes. For example, one company may have an investment in another company's stock that has appreciated. Company A would like to lock in the gain on Company B's stock, but does not wish to recognize the gain in the current year. It can accomplish this by using put options. This strategy would involve buying put options at the current stock price, expiring in the next fiscal year. If the stock price declines, the value of the option would increase, locking in the profit. Another strategy would be to sell a call option at the current market price. This would also lock in the gain, as any decrease in the price of the stock would be offset the increased value of the option. These strategies can also be used to reduce the risk of a drop in the stock price without regard to tax issues."

Tags: accounting finance business options stocks investment

More papers on "Derivatives"

1. Paper #056979 :: Derivatives: The Insurance of the Financial World ( 1,402 words; 8 sources; APA )
2. Paper #067158 :: Currency Derivatives Operations ( 2,955 words; 10 sources; APA )
3. Paper #068968 :: Financial Derivatives ( 3,040 words; 6 sources; MLA )
4. Paper #086755 :: Credit Derivatives ( 1,575 words; 5 sources; )
5. Paper #072224 :: Credit Derivatives ( 4,500 words; 31 sources; APA )

About AcaDemon

We have thousands of high-quality term papers, research papers, essays, book reports and dissertations on every topic. At AcaDemon, you can download those term papers to help you write yours! You can be sure that the term paper, essay, book report or research paper, you download are top-quality, competitively priced and high-level work.

Look for more research papers, essays and book reports on Derivatives

This Free Term Paper Abstract is a part of our Term Paper Library. Here you can purchase research papers, examples of essays, academic dissertations, articles, notes, analytical papers, book reports, stories and poems. We have thousands of persuasive, point-of-view, narrative, critical, compare and contrast and other types of essays in our Library. You can also find here Term papers on "Derivatives", Essays on "Derivatives", Research papers on "Derivatives", Student papers on "Derivatives", Book reports on "Derivatives", Dissertation on "Derivatives", Thesis on "Derivatives", Summary of paper on "Derivatives", Articles written on "Derivatives".