英国金融学assignment范文：Financial Derivatives Advantages and Disad

金融创新的不断发展，随着时间的推移，在世界不同地区的金融市场玩家设计不同的手段和技术，使这些组织降低风险，，更好地完成组织的目标和目的。金融衍生工具是一种工具，可以被视为产品，是金融创新的结果，允许金融组织通过有效的决策，以最大限度地提高其回报。

The financial innovation continues to evolve with the passage of time where financial market players in different parts of the world are designing different means and techniques that in turn enable such organization to decrease its risks and better accomplish an organization's goals and objectives. Financial derivatives are one such instrument that may be regarded as the product that is the outcome of financial innovation that allows a financial organization to maximize its return through efficient decision-making. In majority of business situations the returns that a business organization generates is directly related to the risk it assumes, and this is now regarded as the principle of business that high-risk -- high profit, and low-risk -- low profit. The same applies to financial derivatives (Drake, 2005). Most of the financial experts are of the opinion that one of the major reasons behind the global financial crises could be attributed to the excessive use of financial derivatives and risk-taking initiatives by different financial organization (Jorion, 2009). Realizing the significance of financial derivatives, efforts will be directed in this paper to investigate critically the concept of derivatives. The paper will first present different advantages that a firm may get as a result of practicing the concept of financial derivatives. In the second part of the paper, efforts will be directed towards pinpointing different risks that an organization may encounter because of using financial derivatives.

Table of Contents
1. Introduction to Topic: 3
2. Financial Derivatives: 3
3. Types of Derivatives: 4
3.1. Forward Contract: 4
3.2. Future Contract: 4
3.3. Option Contract: 5
3.4. Swaps: 5
4. Advantages of Derivatives: 6
4.1. Risk Aversion Strategy: 6
4.2. Maximization of profit: 6
4.3. Leverage: 7
4.4. Source of Liquidity: 7
4.5. Efficient Planning: 7
4.6. Ability to Enter into Multiple Derivative Contract: 8
4.7. Helps in Discovering of the Real Price of an Asset: 8
4.8. Short-Selling: 8
4.9. Low Brokerage Fee: 9
5. Disadvantages of Derivatives: 9
5.1. Time Frame: 9
5.2. More Risky: 10
5.3. Speculative Business: 10
6. Conclusion: 11
7. Works Cited 12