A derivative is a type of financial contract whose value is dependent on an underlying asset, basket of assets, or a benchmark of other assets.
Underlying for derivatives are most often stocks, bonds, commodites, currencies, debt and market indexes. The value of the contract itself depend on changes in the prices of the underlying asset.
A derivative is a type of financial asset. Derivatives have no use value. Their fundamental value and demand is generated from their the demand of the underlying.
Examples of derivatives products:
- Interest Rate Swaps
- Credit Default Swaps
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