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Derivative Instruments of Goldman Sachs

Derivative instruments of Goldman Sachs, derived the values from reference rates or market indices. The company has a wide range of derivative instruments, which are traded. The article below furnishes information about the same.
Goldman Sachs Group Inc, commonly referred to as Goldman Sachs is a firm engaged in investment management, securities management and also investment banking.

The company has a broad clientele base, which includes governments, corporations, financial institutions and high-net-worth individuals. There are three broad categories into, which the activities/services of the company are segregated.
  • Asset Management and Securities Services
  • Investment Banking
  • Trading and Principal Investments.

Derivative instruments of Goldman Sachs, which may include equity securities as well as product, related to equities like options; Goldman Sachs also trades convertible securities, over-the-counter or OTC securities and futures. Derivative instruments of Goldman Sachs are traded either when the company acts as:
  • Global agent
  • Principal
  • Market Maker

As far as the futures and the options markets are concerned, the company is responsible for structuring, distributing and executing derivatives on company stocks, market indices, financial measures and industry groups to foster "client transactions."

Derivative instruments or derivative contracts may be referred to as financial instruments deriving their value from reference rates, underlying assets or indices. The derivation may also be obtained by combining all of the above-mentioned factors.
Role of the derivative instruments of Goldman Sachs:
The derivative instruments comprise "future commitments" whereby commodities or financial instruments are bought or sold. They may also be used for currency exchange or payment of interests. The money involved in the exchange process depends solely on the terms and conditions mentioned in the contracts in relation to the securities, rates specified, indices or commodities.
Exclusions from derivative instruments of Goldman Sachs:
There are certain cash instruments, which are not included in the derivative instruments or the derivative contracts. They are:
  • Interest only obligations
  • Principal only obligations
  • Mortgage backed securities
  • Debt instruments, which are indexed.

To meet the credit risks involved in derivatives, a measure taken by the company is the "replacement cost".

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Last Updated on : 1st August 2013

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