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Summary: 1/52
Chapter 7. Derivatives markets.
Manual for SOA Exam FM/CAS Exam 2.
Chapter 7. Derivatives markets.
Section 7.1. Derivatives.
c 2009. Miguel A. Arcones. All rights reserved.
Extract from:
"Arcones' Manual for the SOA Exam FM/CAS Exam 2,
Financial Mathematics. Fall 2009 Edition",
available at http://www.actexmadriver.com/
c 2009. Miguel A. Arcones. All rights reserved. Manual for SOA Exam FM/CAS Exam 2.
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Chapter 7. Derivatives markets. Section 7.1. Derivatives.
Risk sharing
A risk is a contingent financial loss. Changes in commodity
prices, currency exchange rates and interest rates are potential
risks for a business. A farmer faces the possible fall of the
price of his/her crop. Surging oil prices can wipe out airlines'
profits. Manufacturing companies face high rising prices of
commodities. These changes in prices could hurt the viability
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