Derivatives
As the word implies, a derivative instrument is one whose value depends on the value of something else. In the financial marketplace, some securities and some instruments are regarded as fundamental, while others are regarded as derivative. In contrast with fundamental securities, such as stocks or bonds, there is an entirely distinct class of financial instruments called derivatives. In finance, a derivative is a financial instrument or security whose payoffs depend on a more primitive or fundamental good.
Options contract - a type of derivative
An option is a contract between two parties providing the buyer the right, but not the obligation, to buy/sell a quantity of some underlying asset at a particular price on or before a specified date.
No comments:
Post a Comment