Question
In: Finance
what is the difference between a non trading derivative versus a other than equity security?
what is the difference between a non trading derivative versus a other than equity security?
Solutions
Expert Solution
Non trading derivative will mean that all such derivatives which are not traded on the stock exchanges whereas rather than equity security mean all such securities which are not equity securities and which will be including debt securities
non trading derivative will be highly liquid in nature and they will not be having the tradability whereas various securities which are other than equities are traded continuously and they will be having higher liquidity like money market instruments
non trading derivatives are not highly preferred because they will be providing lower liquidity and high third party transaction risk securities but other than equities are not that risky as various money market securities are often referred for the liquidity
Non trading derivative will mean that these will be having a lower transparency where as securities other than equities will be having a higher transparency due to their tradibility.
Non trading derivatives will still be a derivatives which is driving its value from other assets whereas other than equity is can be debt capital or it can be preference shares which have no derivability of their value from third assets.
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