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Derivatives

Derivatives Definition

A tradable financial instrument whose value is dependent on the value of an underlying financial asset or a combination of assets. For instance, an option is a derivative because the value of the option changes in relation to the performance of an underlying stock. Other examples would include futures contracts and mortgage-backed securities. Investors often use derivatives to hedge a portfolio or improve overall returns.
RELATED TERMS
Call option
Futures option
Option
Put option
RELATED CATEGORIES
Options & Futures



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