Contingent Claims

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Contingent claims are assets or securities whose prices depend on the values of other assets or numerical indices. Obvious examples of contingent claims are: put and call options, warrants, futures contracts, and convertible bonds. In addition, virtually every financial asset or contract, traded or not, is a contingent claim as well. The value of a firm's debt and equity depends on the value of the firm's assets. A standard mutual fund management fee contract depends on the value of the managed assets. The marketing service of investment bankers depends on the value of the assets they are trying to sell. Even the taxes that the government collects from investors can be viewed as contingent claims.

[Source: http://www.som.yale.edu/students/courses/elective/Finance-Electives-2000-01.asp]

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