Derivative instruments

Derivative instruments

Contracts such as options and futures whose price is derived from the price of an underlying financial asset.
References in periodicals archive ?
Northern enters into derivative instruments to manage the price risk attributable to future oil production.
However, the Islamic finance industry needs to develop its own innovation phase and not imitate conventional derivative instruments in order for IFIs to maintain their special status and Sharia-compliant approach, the report says.
It is intended to improve how state and local governments report information about derivative instruments in their financial statements.
The use and complexity of derivative instruments and hedging activities have increased significantly over the past several years.
In this successor to Swap Financing (1989) and Swaps and Financial Derivatives (1994), an expert in the area of risk management, financial derivatives (instruments used to trade or manage assets), and capital markets touts the development of derivative instruments as "perhaps the most significant aspect of capital markets in the last 20 years.
Issued in February 2006, FAS 155 amends FAS 133, Accounting for Derivative Instruments and Hedging Activities and FAS 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities.
Auditing Derivative Instruments, Hedging Activities, and Investments in Securities; and Auditing Interests in Trusts Held by a Third-Party Trustee and Reported at Fair Value clarify that receiving a confirmation of fair value from a third party (including a trustee) is not enough to constitute adequate audit evidence with respect to the valuation assertion.
not traded on an exchange] derivative instruments are important financial management tools that, in many respects, reflect the unique strength and innovation of American capital markets," said Arthur Levitt, then chairman of the Security and Exchange Commission, in 1998 testimony to Congress.
While state and local governments use a vast array of increasingly complex derivative instruments to manage debt and investments, they also may be assuming significant risks.
Although the convenience and low cost of using derivative instruments to meet portfolio objectives may have facilitated some investors reaching for more unconventional and possibly riskier strategies, it would be a serious mistake to respond to these developments by singling out derivative instruments for special regulatory treatment.
In this new environment, senior management and boards of directors have an obligation to thoroughly understand and effectively manage the risks derivative instruments pose.
Retailers may hedge foreign purchases through the use of currency forwards, futures, options or other complex derivative instruments.