CFM13010 - Understanding corporate finance: derivatives: overview
Contents
This section of the Corporate Finance Manual explains the commercial background to the use of derivatives.
CFM13020 onwards explains what a derivative is, the concept of underlying assets, how derivative are settled and the sort of contracts and documentation they use.
CFM13110 onwards explains the main types of derivative (forwards, futures, swaps and options, and 바카라 사이트˜exotics바카라 사이트™).
CFM13270 onwards explains how derivatives are used to manage, or 바카라 사이트˜hedge바카라 사이트™, risk.
Note that the term 바카라 사이트˜derivative contract바카라 사이트™ is tax terminology and refers to contracts that are dealt with for the purposes of corporation tax under CTA09/PT7. The term 바카라 사이트˜derivative바카라 사이트™ takes its meaning from the world of finance and is be defined in accounting standards. The definitions under IFRS and UK GAAP, FRS102, and the superseded FRS26 are consistent.
The tax definition of 바카라 사이트˜derivative contract바카라 사이트™ and the accounting definition of 바카라 사이트˜derivative바카라 사이트™ do not coincide exactly. The tax term can have a broader scope in that contracts can be derivative contracts even where the initial investment in the contract is small; this would exclude such contracts from the accounting definition of a derivative. On the other hand, to be a derivative contract, certain conditions set out in CTA09/PT7 must be satisfied, for instance as regards the underlying subject matter, so not all derivatives will be derivative contracts.