A derivative action is a lawsuit brought by shareholders on behalf of a company when it fails to protect its legal rights and interests. Such lawsuits are usually brought against officers or directors for fraud or mismanagement. Shareholders can hire lawyers to pursue the case, but the costs can be high. Dishonesty, mismanagement, corporate fraud, […]
Embedded derivatives modify cash flow in contracts based on underlying measurements, transferring risk between parties. They are found in various contracts and can substitute for other risk management strategies. Their accounting principles are complex, and they are used to make contracts less risky for investors. An embedded derivative is a provision in a contract that […]
A shareholder can file a derivative action lawsuit on behalf of a company if they believe mismanagement is harming the company. The lawsuit is appropriate when a board’s refusal to enforce a corporate right may be harmful to the company. The shareholder must have standing and follow the correct corporate procedure. If successful, the company […]
Derivatives are investment instruments that derive their value from the performance of another asset, such as stocks, bonds, or commodities. They come in different formats, including forwards, options, futures contracts, and swaps, and can be used to hedge against risk or generate profits. However, they also carry potential risks and should be carefully researched before […]
Weather derivatives are a type of investment strategy that considers weather conditions such as temperature and humidity. The seller charges the buyer a premium to protect against loss, and the investment is based on projections of temperature fluctuations. It is different from insurance as it accurately predicts circumstances with a high degree of probability. The […]
