derivative
DefinitionA 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.
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... an essential investing term.
Related Terms
cross-hedging, hedge fund, secondary mortgage market, convexity, notional value, alternative investments, Clearing Member Trade Agreement, constant proportion portfolio insurance, equity derivative, EUREX and
derivative appears in these other terms
derivative security
derivative appears in the definitions of these other terms on BusinessDictionary.com
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