[Verse 1] In the world of finance where risks collide Derivatives help us hedge and ride Four main players in this complex game Options, forwards, futures, swaps by name Each contract built on underlying worth Stocks or bonds or commodities from earth [Chorus] O-F-F-S, remember this way Options Forwards Futures Swaps display Risk management tools that analysts need Transfer the risk, plant the hedge seed O-F-F-S, they pave the way For investment strategies day by day [Verse 2] Options give you rights but not the duty Call to buy or put to sell the beauty Premium paid for this flexibility Strike price set for possibility American style or European gate Exercise early or just wait [Chorus] O-F-F-S, remember this way Options Forwards Futures Swaps display Risk management tools that analysts need Transfer the risk, plant the hedge seed O-F-F-S, they pave the way For investment strategies day by day [Verse 3] Forward contracts lock the future price Customized terms, no standardized slice Over the counter, counterparty risk But tailor-made for needs so crisp Settlement date is fixed in time Obligation binding, not a dime [Bridge] Futures trade on exchanges bright Standardized and cleared each night Margin calls and daily marks Liquidity that never parks Commodity or financial base Regulated trading space [Verse 4] Swaps exchange the payment streams Interest rates or currency themes Notional amounts stay in place Just the cash flows change their face Fixed for floating, common trade Risk positions can be swayed [Chorus] O-F-F-S, remember this way Options Forwards Futures Swaps display Risk management tools that analysts need Transfer the risk, plant the hedge seed O-F-F-S, they pave the way For investment strategies day by day [Outro] From speculation to protection's call Derivatives serve analysts all Understanding each instrument's role Completes the CPA knowledge goal
← Intercorporate Investments | Quality of Financial Reports →