Existing deals

Although the business is completely described, the anticipated cash flows have
different grades of certainty (we do not treat credit and operational risks here).
There are:
Ω Known CF, which are known in time and amount. Example: a straight bond; we
do not consider selling the bond, this would be changing business.
Ω Contingent CF, which are unknown either in time and/or amount.
Example A: A future rate agreement (FRA).
The forward CF is dependent on the yet unknown market rates of the
underlying on the fixing date – nevertheless the payment date is known.
Example B: A European option sold.
As above with the difference that the counterparty has to decide if he or she
wants to execute the option (if certain market circumstances prevail).
Example C: An American option.
As above with the difference that the payment date is not known.