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imported>Doug Williamson |
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| A derivative instrument or contract is one whose value and other characteristics are derived from those of another asset or instrument (sometimes known as the Underlying Asset). | | A method of business valuation which is based on accounting earnings and the ratio of value to earnings of a comparable business (or a comparable group of businesses). |
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| Derivative instruments are widely used by non-financial corporates for hedging purposes.
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| <span style="color:#4B0082">'''Example'''</span>
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| A share option is a type of derivative contract, allowing the holder to buy shares at a certain predetermined strike price.
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| The value of the share option derives from the current price of the related underlying share relative to the option strike price.
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| == See also == | | == See also == |
| * [[CertFMM]] | | * [[Earnings]] |
| * [[Commodity risk]] | | * [[EBIT multiple]] |
| * [[Embedded derivative]] | | * [[EBITDA multiples]] |
| * [[ETD]] | | * [[Price to earnings ratio]] |
| * [[Fixing instrument]]
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| * [[Hedge fund]]
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| * [[Hedging]]
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| * [[Maturity]]
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| * [[Notional principal]]
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| * [[Option]]
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| * [[Outright]]
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| * [[Strike price]]
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| * [[Tracker fund]]
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| * [[Underlying]]
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| * [[Underlying asset]]
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| * [[Underlying price]]
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| * [[XVA]]
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| ===Other links===
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| *[http://www.treasurers.org/node/8599 Masterclass: Derivatives, The Treasurer, December 2012]
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| *[http://www.treasurers.org/node/7849 Use and Misuse of Derivatives, Will Spinney, ACT 2012]
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| [[Category:Risk_frameworks]]
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Revision as of 14:19, 23 October 2012
A method of business valuation which is based on accounting earnings and the ratio of value to earnings of a comparable business (or a comparable group of businesses).
See also
