Summary |
Derivatives are financial instruments/contracts whose value depends upon the value of an underlying. Since their value is essentially derived out of an underlying, they are financial abstractions whose value is derived mathematically from the changes in the value of the underlying.
In India, financial products such as mortgage-backed securities (MBS) and asset-backed securities (ABS) are in existence. Besides the securitized products, the Indian forex and rupee derivative markets have also developed significantly over the years. In its annual policy statement for the year 2008-09, the reserve bank of India (RBI) announced the introduction of currency futures in the eligible exchanges for which the broad framework was announced in August 2008.
This book explains, in simple and lucid language, the basics of financial derivatives and their growth and role in the Indian financial system.
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