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.
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