derivative

Definition

A financial instrument whose characteristics and value depend upon the characteristics and value of an underlier, typically a commodity, bond, equity or currency. Examples of derivatives include futures and options. Advanced investors sometimes purchase or sell derivatives to manage the risk associated with the underlying security, to protect against fluctuations in value, or to profit from periods of inactivity or decline. These techniques can be quite complicated and quite risky.

Cite this definition


Related Terms

weather derivative

'derivative ' appears in the definitions of these terms on BusinessDictionary.com
 



Related Research Articles from the InvestorGuide.com University

Introduction to Other Investments
Stocks, bonds and mutual funds are the most popular asset classes and therefore get most of the market's attention, but there are other important investment opportunities every investor should know about as well, including options, futures, and currency. Although these investments are complex and usually intended for sophisticated investors, it's worth understanding what they are and how they operate in order to decide if they should play any role in your overall investment strategy.

Economic Indicators
Find out about some of the most researched pieces of news in the world. Topics include Gross Domestic Product, Consumer Price Index, the Producer Price Index, Employment Indicators, the Retail Sales Index, the National Association of Purchasing Management Index, the Consumer Confidence Index, and more.

Currency and Precious Metals
Provides insight into the currency and precious metals market. Provides a description of these markets and reasons why (or why not) to pursue these types of investments.



Related Resources from InvestorGuide.com

Stock of the Day Newsletter
Learn about stocks that are making headlines today by signing up for our free newsletter.

   
Stock Research Tool
Using our stock research tool, you have access to our stock tracker, quotes, interactive charts, news, analysis and profile information. Click here to use our stock research tool or enter a stock ticker here:

   

Featured Sponsor

Give this definition a rating from 1 to 5 (5 being the best)...
1    2    3    4    5    



Browse by Letter: # A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
Add this Glossary to your Site | Bookmark InvestorWords.com
Home | Terms by Subject | Keyword Advertising | About Us | Contact Us
Work for InvestorWords.com
BusinessDictionary.com | InvestorGuide.com | WebFinanceInc.com
Disclaimer and Copyright©

Copyright©1997-2008 by WebFinance, Inc. All Rights Reserved.
Unauthorized duplication, in whole or in part, is strictly prohibited.