金融創(chuàng)新的不斷發(fā)展，隨著時(shí)間的推移，在世界不同地區(qū)的金融市場玩家設(shè)計(jì)不同的手段和技術(shù)，使這些組織降低風(fēng)險(xiǎn)，，更好地完成組織的目標(biāo)和目的。金融衍生工具是一種工具，可以被視為產(chǎn)品，是金融創(chuàng)新的結(jié)果，允許金融組織通過有效的決策，以最大限度地提高其回報(bào)。

The financial innovation continues to evolve with the passage of time where financial market players in different parts of the world are designing different means and techniques that in turn enable such organization to decrease its risks and better accomplish an organization's goals and objectives. Financial derivatives are one such instrument that may be regarded as the product that is the outcome of financial innovation that allows a financial organization to maximize its return through efficient decision-making. In majority of business situations the returns that a business organization generates is directly related to the risk it assumes, and this is now regarded as the principle of business that high-risk -- high profit, and low-risk -- low profit. The same applies to financial derivatives (Drake, 2005). Most of the financial experts are of the opinion that one of the major reasons behind the global financial crises could be attributed to the excessive use of financial derivatives and risk-taking initiatives by different financial organization (Jorion, 2009). Realizing the significance of financial derivatives, efforts will be directed in this paper to investigate critically the concept of derivatives. The paper will first present different advantages that a firm may get as a result of practicing the concept of financial derivatives. In the second part of the paper, efforts will be directed towards pinpointing different risks that an organization may encounter because of using financial derivatives.

Table of Contents
1. Introduction to Topic: 3
2. Financial Derivatives: 3
3. Types of Derivatives: 4
3.1. Forward Contract: 4
3.2. Future Contract: 4
3.3. Option Contract: 5
3.4. Swaps: 5
4. Advantages of Derivatives: 6
4.1. Risk Aversion Strategy: 6
4.2. Maximization of profit: 6
4.3. Leverage: 7
4.4. Source of Liquidity: 7
4.5. Efficient Planning: 7
4.6. Ability to Enter into Multiple Derivative Contract: 8
4.7. Helps in Discovering of the Real Price of an Asset: 8
4.8. Short-Selling: 8
4.9. Low Brokerage Fee: 9
5. Disadvantages of Derivatives: 9
5.1. Time Frame: 9
5.2. More Risky: 10
5.3. Speculative Business: 10
6. Conclusion: 11
7. Works Cited 12