Financial Derivative
Posted by Ripon Abu Hasnat on Friday, June 13, 2014 | 0 comments
A derivative is a financial contract which derives its
value from the performance of another entity such as an asset, index, or
interest rate, called the "underlying". Derivatives are one of
the three main categories of financial instruments, the other two being
equities (i.e. stocks) and debt (i.e. bonds and mortgages). Derivatives include
a variety of financial contracts, including futures, forwards, swaps, options,
and variations of these such as caps, floors, collars, and credit default
swaps. Most derivatives are marketed through over-the-counter (off-exchange) or
through an exchange such as the Chicago Mercantile Exchange; while most
insurance contracts have developed into a separate industry.
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