An Inflation Derivative is a subclass of derivative that is used by individuals to mitigate the effects of potentially large levels of inflation. Swaps are the most common types of inflation derivatives, in which a counterparty’s cash flows are linked to a price index and the other counterparty is linked to a conventional fixed or floating cash flow. In finance, inflation … [Read more...]
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Interest Rate Derivative
An interest rate derivative is a derivative which has as an ability to pay or receive a given amount of money at a given interest rate. Interest rate derivatives are the most popular kind of derivative, and include interest rate swaps and forex swaps . It is a derivative where the underlying asset is the right to pay or receive a notional amount of money at a given interest … [Read more...]