the value of finite equity - based financial instruments is related to future financial performance of an underlying company or companies . one instrument based on periodically reported financial performance operates on a swap basis between two parties . one party pays the second party a fixed , negotiated in advance , payment at the end of one or more calculation periods during the lifetime of the instrument . the other party pays the first party a variable payment equal to the reported financial performance during the calculation period multiplied by a percentage predetermined in advance . a second finite equity instrument is freely traded on a futures exchange between an issue date and a settlement date . at the settlement date the price of the instrument is fixed at a settlement value which is derived from the summed financial results of a company or companies between the issue date and the settlement date .