1、Financial DerivativesChapter 11Lead-inLanguage NotesKey PointsFollow-up Tasks11.111.311.211.4CONTENTSExtended Tasks11.511.1Lead-inThis chapter will first of all examine the definitiondefinition of financial derivatives.Secondly,it will introduce in detail the common typescommon types of financial de
2、rivatives.Then it will go on to discuss the functionsfunctions of the derivative market.Finally,it will reveal the risksrisks of financial derivatives.In finance,derivatives are contracts between two parties that specify conditions(especially the dates,resulting values and definitions of the underly
3、ing variables,the parties contractual obligations,and the notional amount)under which payments are to be made between the parties.11.2 Key Points11.2.1 Definition of Financial Derivatives11.2 Key Points11.2.2 Types of Financial Derivatives11.2 Key Points11.2.2 Types of Financial DerivativesSwapsOpti
4、onsForwardsFuturesFutures generally refer to the futures contract,which includes the provisions of a specific time and place,delivery of a certain number of standard objects of the contract.an option is a contract which gives the buyer(the owner or holder of the option)the right,but not the obligati
5、on,to buy or sell an underlying asset or instrument at a specified strike price on a specified date,depending on the form of the option.A forward is the contract between the two sides promised in the future one day at a specific price to buy or sell a certain number of subject matter.A swap is a der
6、ivative contract through which two parties exchange financial instruments.11.2 Key Points11.2.3 Functions of the Derivative MarketFirstly,prices in a structured derivative market not only replicate the discernment of the market participants about the future but also lead the prices of underlying ass
7、ets to the professed future level.1Secondly,the derivative market reallocates risk from the people who prefer risk aversion to the people who have an appetite for risk.2Thirdly,in the presence of an organized derivatives market,speculation can be controlled,resulting in a more meticulous environment
8、.311.2 Key Points11.2.4 Risks of Financial Derivatives complexity leverage time restriction potential for scamscall k:l 买的指令congregate kgrget 聚集collateral kltrl 担保金，抵押物derivative drvtv 衍生工具expiration ekspren 告终，期满，截止forward f:wd 远期fraud fr:d 欺诈future fju:t(r)期货hedging hed 套头交易，对冲买卖，套期保值leverage li:v
9、rd 杠杆margin m:dn 保证金11.3 Language NotesI.Wordsobligor blg:债务人option pn 期权principal prnspl 本金put pt 卖的指令reconnaissance rknsns 勘查royalty rlti 版税scam skm 骗局settlement setlmnt 结算speculation spekjulen 投机买卖spot spt 现货swap swp 互换，掉期工具assorted markets at a discount at a premium back-to-back loans basic asse
10、ts bond index Call options capital structure cash flow Commodity Futures Trading Commission(CFTC)11.3 Language NotesII.Phrases contractual obligation credit default swap(CDS)credit ratings delivery price fixed rate floating rate Great Depression high leverage leverage effect the U.S.Treasury 美国财政部un
11、it of account计量单位London Metal Exchange market transparency mortgage-backed security(MBS)nominal principal notional amount open auctions performance bond Ponzi schemepositive market price movement put options 11.3 Language NotesII.Phrases resource allocation reverse market spot price spot transaction
12、 standard metal contract strike price subject matter synthetic collateralized debt obligationsunderlying asset U.S.Treasury 美国财政部unit of account计量单位1.Derivatives can be used for a number of purposes,including insuring against price movements(hedging),increasing exposure to price movements for specul
13、ation or getting access to otherwise hard-to-trade assets or markets.2.Prices in a structured derivative market not only replicate the discernment of the market participants about the future but also lead the prices of underlying to the professed future level.3.In a nutshell,there is a substantial i
14、ncrease in savings and investment in the long run due to augmented activities by derivative market participant.4.Derivatives have four large risks.The most dangerous is that its almost impossible to know any derivatives real value.5.The leverage involved meant that when losses occurred,they were mag
15、nified throughout the entire economy.11.3 Language NotesIII.Sentences 11.4 Follow-up TasksI.MatchingDirections:Match the English words and phrasesEnglish words and phrases in the leftleft column with the proper ChineseChinese equivalents in the rightright column.()1.contractual agreementsA.庞氏骗局()2.e
16、normous lossesB.巨大损失()3.futures contractC.即期交易()4.interbank interestD.标的变量()5.Ponzi scheme E.期货合约()6.proper valuationF.适当估值()7.spot transactionG.技术背景()8.resource allocationH.合同协议()9.technical context I.资源配置()10.underlying variableJ.银行间利率11.4 Follow-up TasksII.Multiple ChoicesDirections:Directions:Ch
17、oose the best answer for each of the following statements or questions.1.Which of the following is a derivative financial instrument?()A.StockB.Bond C.FuturesD.Foreign exchange2.The primary function of derivative financial instruments is _.()A.price discovery B.speculative measures C.value preservat
18、ion measures D.arbitrage measures11.4 Follow-up TasksII.Multiple ChoicesDirections:Directions:Choose the best answer for each of the following statements or questions.3.A financial derivative is a financial contract whose value depends on _.()A.interest rateB.exchange rateC.fundamental asset pricesD
19、.commodity prices4.An agreement reached by buyers and sellers in the form of an open auction to trade a standard number of specific financial instruments at a specific time in an organized exchange refers to _.()A.forward B.futures C.options D.swap11.4 Follow-up TasksII.Multiple ChoicesDirections:Di
20、rections:Choose the best answer for each of the following statements or questions.5.Which of the following commodities can be regarded as both commodity futures and financial futures _.()A.gold B.interest rate C.grain D.exchange rate11.4 Follow-up TasksIII.Short Answer Questions Directions:Answer ea
21、ch of the following questions brieflybriefly.1.What are the characteristics of derivative financial instruments?2.What is the time value of the option and what factors does it affect?3.What are the influencing factors of the option contract price?4.What are the differences between speculation and ar
22、bitrage?5.What are the risks of derivative financial instruments?11.4 Follow-up TasksIV.Translation Directions:Translate the following Chinese paragraph into Englishinto English.金融衍生品是指以货币、债券、股票等传统金融产品为基础，以杠杆性的信用交易为特征的金融产品。根据产品形态，可以把金融衍生品分为远期合约、期货合约、掉期合约和期权交易四大类。金融衍生品的交易采用保证金制度，即交易所需的最低资金只需满足基础资产价值的
23、某个百分比。保证金越低，杠杆效应越大，风险也就越大。因此，金融衍生品的交易具有高风险、高收益的特点。Money doesnt grow on trees.English proverbWhen you combine ignorance and leverage,you get some pretty interesting results.Warren BuffettDerivatives are financial weapons of mass destruction.Warren BuffettWhen it is a question of money,everybody is of
24、 the same religion.VoltaireMake money and the whole nation will conspire to call you a gentleman.George Bernard Shaw11.5 Extended TasksI.Proverbs and Quotes11.5 Extended TasksII.Interview ExcerptBetsy Mettler is a Partner of B&B Structured Finance Ltd.She has many years of financial markets experien
25、ce starting in investment banking at JPMorgan.She has undertaken several derivatives and securitization consultancy projects as well as hundreds of training assignments in North America and Europe.In this interview excerpt,Mettler explains why derivatives are her favorite financial products.11.5 Extended TasksIII.Movie ClipThis clip exposes the tricks of making money by swaps.Thanks
