Answer / chandu_c4u

Derivatives are financial instruments whose value changes
in response to the changes in underlying variables. The
main types of derivatives are futures, forwards, options,
and swaps.

The main use of derivatives is to reduce risk for one
party. The diverse range of potential underlying assets and
pay-off alternatives leads to a huge range of derivatives
contracts available to be traded in the market. Derivatives
can be based on different types of assets such as
commodities, equities (stocks), bonds, interest rates,
exchange rates, or indexes (such as a stock market index,
consumer price index (CPI) — see inflation derivatives — or
even an index of weather conditions, or other derivatives).
Their performance can determine both the amount and the
timing of the pay-offs.

Answer / srinivasreddy

DERIVATIVES IS A PRODUCT WHOSE VALUE IS DERIVES FROM THE
VALUE OF THEIR UNDERLINE ASSETS.

Answer / ruchika

Derivaties are financial instruments whose value are
derived from underlying asstets,whivh may be
stochk,shares,dedentures,currency etc

Answer / amrit

securities which derive their values from an underlying
asset

Answer / venkatesham

derivative is product whose value are derived from one or
more basic underline asset. which may be stock, shares,
debentures, or currency etc

Answer / s.srinu

Derivative is a product whose value is derived from value
of one or more basic variables of underlying an asset
types of derivatives
1.call option
2.put option
3.forward
4.future

Answer / ambika

Derivatives are financial contracts, or financial
instruments, whose values are derived from value of an
underlying asset. The underlying asset on which derivatives
are based can be commodities, equities (stocks),
residential mortgages, commercial real estate loans, bonds,
interest rates, exchange rates, or indices (such as a stock
market index, consumer price index (CPI) — see inflation
derivatives — or even an index of weather conditions, or
other derivatives). Credit derivatives are based on loans,
bonds or other forms of credit.

The main types of derivatives are futures, forwards,
options and swaps.

Answer / satheesh

Derivatives : Deriving the future value of underlying asset.

Answer / arvind kulkarni

Derivatives—contracts that gamble on the future prices of
assets--are secondary assets, such as options and futures,
which derive their value from primary assets, such as
currency, commodities, stocks, and bonds. The current price
of an asset is determined by the market demand for and
supply of the asset; however, the future price of an asset
typically remains unknown. A week or a month in the future,
the price may increase, decrease, or remain the same.
Buyers and sellers often like to hedge their bets against
this uncertainty about future price by making a contract
for future trading at a specified price. The contract—a
financial instrument--is called a derivative.

A future or forward contract is formed when both the buyer
and the seller are committed and legally obliged to
exchange the underlying asset when the contract matures. An
option, on the other hand, is a contract that gives its
owner the right, but not the obligation, to buy or sell the
underlying asset on or before a given date at the agreed-
upon price.
Example
Suppose you expect that six months from now the price of
the U.S. dollar with respect to the Canadian dollar will be
higher than it is today, and would like to purchase US
$1,000 six months from now at today’s rate. Suppose the
current price of US $1,000 is CAN $1,200.

Another person expects that the price of the U.S. dollar
will decrease over the coming six months, and is willing to
sell U.S. dollars at today’s rate. Both of you can make a
contract that will be exercised six months from now.
Interestingly, neither of you needs to put down any
currency today when signing the contract. When the contract
matures, transactions must be carried out at the agreed-
upon rate. This type of contract is called a forward
contract.

Alternatively, suppose the contract is sold for a non-
refundable fee of $25. If the price of the U.S. dollar goes
up, you are likely to exercise your right. On the other
hand, if the price of the U.S. dollar goes down, you will
be better off not exercising your right; in this case, you
are losing only the fee. This type of contract is known as
a ’call option.’ Similarly, a ’put option’ gives the owner
the right to sell rather than buy.

Answer / ch

Derivative is a product whose value is derived from value
of one or more basic variables of underlying an asset
types of derivatives
1.call option
2.put option
3.Options
4.future

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