Derivative financial assets, also known as financial derivatives and "financial derivatives", are concepts corresponding to basic financial products, and refer to derivative financial products whose prices change with the prices (or values) of basic financial products. Derivative securities are financial instruments derived from traditional financial instruments such as currency, bonds and stocks, which are characterized by leverage and credit transactions.

Convertible bonds are bonds that bondholders can convert into common shares of the company at the agreed price at the time of issuance. If the bondholders do not want to convert shares, they can continue to hold the bonds until the repayment period expires to collect the principal and interest, or they can be sold and realized in the circulation market.

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Common tools of derivative finance

(1) futures contract. Futures contract refers to the standardized contract made by the futures exchange to deliver a certain quantity and quality of physical or financial goods at a specific time and place in the future.

(2) Option contract. Option contract refers to the option contract that the buyer of the contract can get after paying a certain amount. Warrants launched in the securities market belong to call options, while put warrants belong to put options.

(3) Forward contracts. Forward contract refers to a contract in which both parties agree that the buyer will buy a certain amount of subject matter from the seller at an agreed value on a certain date in the future.

(4) swap contracts. A swap contract refers to a contract in which both parties exchange a series of cash flows in a certain period in the future. According to different contract items, swaps can be divided into interest rate swaps, currency swaps, commodity swaps and equity swaps. Among them, interest rate swap and currency swap are more common.

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Baidu encyclopedia-convertible bonds

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Baidu encyclopedia-derivative financial assets