Select one of the following derivative contracts. Then, describe the type of derivative(s) included in the derivative contract. Also, describe the type of underlying variable(s) in the selected derivative contract.

1) Select one of the following derivative contracts. Then, describe the type of derivative(s) included in the derivative contract. Also, describe the type of underlying variable(s) in the selected derivative contract.

Life insurance
Home mortgage
Rate lock in a home mortgage
Employee stock option
Structured debt obligations and deposits
Why would a firm use the selected derivative contract to hedge its risks? Be sure to support your points with credible sources.

Respond (at least two additional posts) to the instructor’s posts and other students’ posts in any of the following ways:

Build on something your classmate said.
Explain why and how you see things differently.
Ask a probing or clarifying question.
Share an insight from having read your classmate’s posting.
Offer and support an opinion.
Expand on your classmate’s posting.

2) It was indicated that options grant the owner the right to bull or sell. Why is this an important factor? Does the owner pay a premium for the right?

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