briefly explain the meaning of financial derivatives ?

Answer 1

Financial derivatives are "derived" from some financial underlying asset, like a stock or bond or commodity or currency.

Definition
In finance, a security whose price is dependent upon or derived from one or more underlying assets. The derivative itself is merely a contract between two or more parties. Its value is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. Most derivatives are characterized by high leverage.


Futures contracts, forward contracts, options and swaps are the most common types of derivatives. Because derivatives are just contracts, just about anything can be used as an underlying asset. There are even derivatives based on weather data, such as the amount of rain or the number of sunny days in a particular region.

Derivatives are generally used to hedge risk, but can also be used for speculative purposes. For example, a European investor purchasing shares of an American company off of an American exchange (using American dollars to do so) would be exposed to exchange-rate risk while holding that stock. To hedge this risk, the investor could purchase currency futures to lock in a specified exchange rate for the future stock sale and currency conversion back into euros.

Answer 2

A derivative is a generic term for specific types of investments from which payoffs over time are derived from the performance of assets (such as commodities, shares or bonds), interest rates, exchange rates, or indices (such as a stock market index, consumer price index (CPI) or an index of weather conditions). This performance can determine both the amount and the timing of the payoffs. The diverse range of potential underlying assets and payoff alternatives leads to a huge range of derivatives contracts available to be traded in the market. The main types of derivatives are futures, forwards, options and swaps.

Answer 3

i do no longer comprehend a thank you to quickly intricate. yet i will try. The meaning of existence is in the circle of existence. there is not any longer basically a beging, a center and an end. What i'm attempting to declare is that one and all existence is recycled in some form or yet another an each and every ingredient has this is perpose.

Answer 4

financial derivatives are part of any firm's risk-management strategy to ensure that value-enhancing investment opportunities are pursued without taking away the freedom to manage risk effectively .

Answer 5

WHERE DELIEVERY OF SECURITIES SHOULD NOT BE DELIVERED