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Answer Posted / c s v.shyam sunder
It can be defined as something which derives its value from
an underlying product being a stock,currency,or anything
that carries a market price.The market price is subject to
fluctuations due to vapour factors defeating its demand and
supply there by associating itself to various stand alone
factors. So derivatives is a by-product of the core
product,which can be used to hedge, speculate and also
undertake arbitrage activities.
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