CFM13110 - Understanding corporate finance: derivatives: types of derivative
Four basic types
Derivatives can be seen as falling into four basic types:
»Ê¹ÚÌåÓýappse basic building blocks can be combined in different ways to create a myriad of derivative contracts. »Ê¹ÚÌåÓýappy can also be combined with debt instruments or other financial instruments. »Ê¹ÚÌåÓýappse arrangements can appear very complicated. But once the concepts behind the basic derivative contracts and why companies use them are understood, you will find you are able to analyse any novel or complex structures you may meet.