Question: Learning Objectives After studying this chapter, you should be able to: 7.1 Explain what derivatives are and distinguish between using them to hedge and using

Learning Objectives After studying this chapter, you should be able to:

Learning Objectives After studying this chapter, you should be able to: 7.1 Explain what derivatives are and distinguish between using them to hedge and using them to speculate (pages 213-214) Define forward contracts and explain their role in the financial system (pages 214-215) Explain how futures contracts can be used to hedge and to speculate (pages 215-224) 7.4 Distinguish between call options and put options and explain how they are used (pages 225234) 7.5 Define swaps and explain how they can be used to reduce risk (pages 234-239) 7.2 7.3

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