Derivatives (finance)

From Conservapedia
Jump to: navigation, search
For mathematical derivatives, see: Derivative (calculus)

Derivatives are financial instruments that derive their value from underlying assets. Derivatives can be traded (bought and sold) in a manner similar to stock. Derivatives include futures, options and swaps.

The value and prices of derivatives depends on the fluctuating value of the underlying asset. But as derivatives become more important, their trading can influence the underlying asset pricing.

Derivatives range from the exotic to the mundane. Famously, Barclay's Bank trading in derivatives almost lead to their bankruptcy, but the purchase of a simple forward currency contract is also dealing in a derivative.

Derivatives can be traded on a financial exchange, or in an over-the-counter (OTC) market.