Derivative And Investment Products

FORWARD TRANSACTIONS

Definition:

This is a contract to purchase or sell a foreign currency amount at a future date at an exchange rate determined today.  A foreign currency may be forward purchased or sold against the TL or any other foreign currency.

Advantages:

Hedging against exchange rate risk.

Opportunity to make high profits.

Ability to take a position without investing the principal amount.

Opportunity to determine costs in advance.

 

TREASURY BONDS

Definition:

Treasury Bonds (with a maturity of under 1 year) and State Bonds (with a maturity of 1 year or longer) are internal debt securities issued by the Treasury of the Turkish Republic.

Advantages:

Guarantee of the Turkish Republic Treasury at repayment.

Easily bought and sold.

Potentially higher profit margins thanks to ability to convert to cash before maturity.

Guaranteed earnings in the case where customers wait for maturity.

Knowing interest income beforehand at the point of investment.

No costs involved.

 

OPTIONS

Definition:

A form of derivative instrument granting the right to purchase sell foreign exchange at a future date and at a predetermined price against a certain commission.

Advantages:

The party purchasing the right is not obligated to realize the transaction.

In the case where the party purchasing the right does not exercise this right, the loss involved is limited to the premium paid.

The potential for profit is limitless.

 

SWAPS

Definition:

Swap transactions consist of the exchange of predetermined cash flows between two parties at a future date.  Swap transactions represent the exchange of any receivable, debt, or any asset with another receivable, debt, or asset within a certain timeframe.

Advantages:

Hedging against exchange rate risk.

Organization of cash flows.

Opportunity to predetermine costs.

Please visit the closest Limasol Türk Kooperatif Bank Ltd. branches for further information regarding our Treasury Funds Products.