List of Financial Instruments | Financial Management

List of financial instruments investopedia

List of financial instruments investopedia


There are many other jobs related to financial instruments. In fact, it would not be wrong to say that most of the jobs in the financial industry can be traced to the financial instruments. Hope you find this article interesting. Do keep visiting us on 8775 edupristine blogs 8776 for blogs related to myriad other topics that you may find interesting.

Indicative List of Financial Instruments

As defined by the Committee on Global Financial System, structured finance comprises of asset pools, liabilities backed by asset pools and the use of a special purpose vehicle (SPV) to disassociate the asset pool 8767 s credit risk from the credit risk of the securitized products created from the asset pool.

Financial Instruments | Intelligent Economist

i. LIBOR (London Inter-Bank Offer Rate) is the rate at which funds are borrowed and lent by banks in London 8767 s call money market. Each day, the LIBOR is calculated at 66 am using rates quoted by 8 British banks.

What is a financial instrument? Definition and examples

They may carry a fixed rate of interest (fixed coupon bonds), no rate (zero coupon bonds), or a variable rate of interest (floating rate bonds). The latter are usually linked to the interest rate at which banks offer to lend money to each other for one month, three months, and six months in the inter-bank market. Called the inter-bank offer rate, it is the weighted average of rates quoted in the inter-bank market at a particular time on every business day. Each financial centre has a different inter-bank offer rate.

Financial Instruments - Types and Jobs - EduPristine

They provide credit protection against a pre-defined event. Credit Default Swaps (CDSs) and Total Return Swaps (TRSs) are the two types of credit derivatives. The CDS transfers default risk from-(the buyer) to (the seller) who assumes the credit risk. The seller may be a hedge fund or an investment bank. The buyer pays a premium to the seller. When a credit event occurs (for example, a default or bankruptcy) the buyer receives a pre-specified lump sum from the seller and hands over the least priced assets (on which the credit risk was covered) in return. The first CDS was issued in 6995.

A currency is the underlying asset in a currency derivative. Currency derivatives—currency futures and options—are traded on three exchanges in India—the NSE, BSE and the United Stock exchange (USE). The USE is India 8767 s youngest exchange and is dedicated to currency derivatives. It commenced trading operations in September 7565.

Derivative instruments are instruments whose worth we derive from the value and characteristics of at least one underlying entity. Assets, interest rates, or indexes, for example, are underlying entities.

Shares in funds , asset-backed securities ( ABS ) and other structured products are composite products that are difficult to classify in a particular category. In the case of an ABS or CDO , for example, the main risk is related to securitised assets and can take many forms. Furthermore, if the structure includes a CDS or a guarantee provided by a monoline insurance company, the quality of the security also depends on the CDS underlying risk or the guarantor. Such instruments, by their nature composite, cannot like the others be assimilated to a specific economic risk.

iv. MIBOR (Mumbai Inter-Bank Offer Rate) is the rate at which funds are borrowed and lent by banks in Mumbai. MIBOR rates are calculated by the, The National Stock Exchange (NSE) and Bloomberg. The NSE collects rates from 88 banks and primary dealers and calculates the MIBOR using the bootstrapping method. These are rates at which they would lend Rs. 555 million in the overnight money market

A treasury analyst is in charge of an organization 8767 s financial activity, managing cash flow, credit, income, asset levels, and liability obligations. Their exact job duties may vary depending on their employer (for example, whether they work at businesses, non-profit organizations, or government agencies). Generally, though, these professionals coordinate with all internal finance, accounting, and accounts departments to ensure correct money management. Treasury analysts may also be tasked with analyzing financial patterns and making projections for income and expenses, as well as assisting in the development of investment strategies.

Foreign exchange instruments in the form of cash/currency are Spot foreign exchange and those in form of exchange traded derivatives are currency futures and over the counter derivatives are foreign exchange options, outright forwards, foreign exchange swaps and currency swaps.

GARP does not endorse, promote, review or warrant the accuracy of the products or services offered by EduPristine, nor does it endorse the scores claimed by the Exam Prep Provider. Further, GARP is not responsible for any fees paid by the user to EduPristine nor is GARP responsible for any remuneration to any person or entity providing services to EduPristine. ERP ® , FRM ® , GARP ® and Global Association of Risk Professionals™ are trademarks owned by the Global Association of Risk Professionals, Inc.

There is one more type of financial instrument on the basis of the asset class – Forex instruments. These instruments include forex futures, forex options, currency swaps and more.

Cash instruments get their value directly by the markets. They can be securities such as loans and deposits, where both borrowers and lenders have to agree on a transfer.


Leave a comment