Derivative
A derivative is a financial contract whose value is derived from an underlying asset or group of assets, typically between two or more parties. These contracts specify a pre-agreed price and date for delivery or settlement. Common types of derivative contracts include: - Futures - Options - Forwards - Swaps. Derivatives can be traded either on an exchange or over the counter (OTC). Since their value is linked to the performance of underlying assets (such as stocks, commodities, or currencies), the price of a derivative fluctuates based on changes in the value of these underlying assets. Derivatives can be traded either on an exchange or over the counter (OTC). Since their value is linked to the performance of underlying assets (such as stocks, commodities, or currencies), the price of a derivative fluctuates based on changes in the value of these underlying assets.
Related Terms
Convertible Arbitrage
Convertible arbitrage is a trading strategy where investors buy convertible securities (like bonds or preferred...
Internal Rate Of Return
The Internal Rate of Return (IRR) measures the compound annual return of a financial asset,...
Assets And Liabilities
An asset is something that holds monetary value and has the potential to generate profits...
Liquidity Ratio
The Liquidity Ratio is a financial metric used to assess a company’s ability to meet...
Insider Trading
Insider trading involves buying or selling shares based on non-public, material information, often obtained through...
Indices
Indices are baskets of financial instruments that gauge their collective performance. For instance, stock market...
