Notices

Derivative

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Revision as of 12:13, 24 June 2005 by Rhody Trader (Talk | contribs)

Description

Derivatives are financial instruments which have their value determined by (derived from) the value of an underlying instrument, figure, result, or event. They come in a wide array of types and purposes. Some are standardized and traded on exchanges, while others are customized and transacted over-the-counter.

Usage of Derivatives

Derivatives were originally created for the purposes of hedging. They maintain that focus, though speculators have taken to them as well. The appeal is that they provide those who use them the ability to target very specific objectives.

Types of Derivatives


Contracts for Difference (CFDs) can also be considered derivatives, as can Convertibles.

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