What Are the Four Basic Types of Contracts or Instruments

question 34

Essay

What are the four basic types of contracts or instruments used in financial risk management?

---

Definitions:

Capital Turnover

A ratio that measures the efficiency of a company's use of its capital in generating revenue.

Invested Capital

The total amount of money put into a company by its owners and creditors for use in the business operations, often used as a metric in financial analysis.

Investment Centre

An organizational division or unit that is responsible for generating its own revenue as well as controlling its own costs, often evaluated based on its profitability and return on investment.

Return On Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated as the net profit of the investment divided by its initial cost.