Derivatives
Derivatives provide three important economic functions: (1) risk management, (2) price discovery, and (3) transactional efficiency. The primary purpose of risk management is to protect existing profits, not to create new profits.
Derivatives provide three important economic functions: (1) risk management, (2) price discovery, and (3) transactional efficiency. The primary purpose of risk management is to protect existing profits, not to create new profits.
Generally, if we consider this topic in pure deepness, mathematical finance will derive and extend the mathematical or numerical models without necessarily establishing a link to financial theory, taking observed market prices as inputs.