Difference between revisions of "Derivatives (finance)"
Jump to navigation
Jump to search
(slight expansion and removal of cash as the only underlying asset.) |
m (bold subject) |
||
| Line 1: | Line 1: | ||
| − | 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]]. | + | '''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. | 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. | ||
Revision as of 03:51, October 18, 2007
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.
Deirvatives 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.