Derivatives Theoretical And Empirical Study

Derivative financial instruments include forward contracts, futures contracts, option, swaps. Financial derivatives market is now divided into exchange-traded market and OTC (over-the-counter market), exchange-traded derivatives include forward rate agreements , options, futures.In modern financial markets, derivatives have become an important component of that is an investment tool to spread the investment risk (that use derivatives to diversify the overall portfolio risk), it is also a hedge varieties , especially for the import and export enterprises and foreign investment enterprises (enterprises with foreign investment is in foreign currency as its functional currency business) to avoid the exchange rate, changes in commodity prices and interest rates risk. Through the identification of certain derivatives contracts to avoid the risk of unexpected, so this can not be expected cash flow is predictable cash flow. In this paper, derivatives recognition, measurement, and discussed the report, the recognition of derivative instruments are described. Discussed the measurement of property derivatives, especially the financial crisis in the context of the controversial fair value of properties analyzed, this paper that even if the fair value measurement attributes of the financial crisis spread中have a certain effect, but is a fair value measurement attributes Rengran reflect the current best measurement of economic and business real property, for example demonstrated by the measurement attributes which best reflects the real business of the entire economy. In determining the fair value measurement attribute this context, the discussion of the methods used to determine the "fair value" that uses market, matrix method, the valuation model. I think the most important derivatives are the valuation of derivative products, namely, how to reflect the fair value of derivatives, especially for certain types of derivatives trading is not active or certain types of derivatives spread (bid-ask) more derivatives when the valuation is particularly important to this valuation best reflects the real deal. (Discussed above are derivatives investment or speculation), the next derivative used as a hedging tool that the three accounting methods (fair value hedge, cash flow hedge, net investment in foreign operations), using three kinds of accounting terms, Finally, I discussed the derivatives and hedge accounting reports as a result of the differences between criteria of certain transactions caused by differences in accounting treatment, resulting in differences in financial reporting. I also discussed in the hedging derivatives under hedge accounting treatment and non-difference and difference in impact on the financial statements. As users of financial statements should be concerned about these differences impact on the financial statements. Particular investors to compare companies in the financial statements of enterprises should be concerned about the impact of the financial statements.