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Historical development of derivatives' underlying assets

Author

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  • Sylvie Riederová

    (Ústav podnikové ekonomiky, Mendelova univerzita v Brně, Zemědělská 1, 613 00 Brno, Česká republika)

  • Kamila Růžičková

    (Ústav podnikové ekonomiky, Mendelova univerzita v Brně, Zemědělská 1, 613 00 Brno, Česká republika)

Abstract

The derivative transactions are able to eliminate the unexpected risk arising from the price volatility of the asset. The need for risk elimination relates to the application of derivatives.This paper is focused on derivatives' underlying assets themselves. With the plain description, supported by progressive summarization, the authors analysed the relevant theoretical sources, dealt with derivatives, their underlying assets and their development in centuries. Starting in the ancient history, 2000 BC, the first non-standard transaction, very close to today's understanding of derivatives, becomes to be closed between counterparties. During the time, in different kingdoms and emporiums, derivatives started to play a significant role in daily life, helping to reduce the uncertainty of the future. But the real golden era for derivatives started with the so called 'New derivative markets' and computer supported trading. They have extended their form from simple tools to most complex structures, without changing their main purpose hedging and risk - reduction.For the main purpose of this paper it is impossible to split the development of derivatives from the very wide extension of underlying assets. The change of these assets was one of the main drivers in derivatives development. Understanding of the dynamic character of these assets helps to understand the world of derivatives.

Suggested Citation

  • Sylvie Riederová & Kamila Růžičková, 2011. "Historical development of derivatives' underlying assets," Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, Mendel University Press, vol. 59(7), pages 521-526.
    • Handle: RePEc:mup:actaun:actaun_2011059070521
    DOI: 10.11118/actaun201159070521
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    References listed on IDEAS

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    1. Poitras, Geoffrey, 2002. "Risk Management, Speculation, and Derivative Securities," Elsevier Monographs, Elsevier, edition 1, number 9780125588225.
    2. Black, Fischer & Scholes, Myron S, 1973. "The Pricing of Options and Corporate Liabilities," Journal of Political Economy, University of Chicago Press, vol. 81(3), pages 637-654, May-June.
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    Cited by:

    1. Andrea Colombo & Luigi Bellomarini & Stefano Ceri & Eleonora Laurenza, 2023. "Smart Derivative Contracts in DatalogMTL," Temi di discussione (Economic working papers) 37, Bank of Italy, Economic Research and International Relations Area.

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