Question

27. Oldest form of financial derivatives
(A) Forward
(B) Future
(C) Options
(D) Swaps​

Answer 1

Explanation:

Type 1: Forward Contracts

Forward contracts are the simplest form of derivatives that are available today. Also, they are the oldest form of derivatives. A forward contract is nothing but an agreement to sell something at a future date.

Answer 2

The oldest form of financial derivates is the forward contract. (Option A)

• A forward contract is the oldest and also the simplest form of financial derivates that exists even today.
• A forward contract as the term suggests is a contract or an agreement that agrees to sell something on a date in the future.
• The transaction price will be decided along with the signing of the agreement and not in the future.
• In this financial derivate, the reversal of the agreement is not possible even before the expiration, since there are only two counterparties involved in a forward contract.