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what is the meaning of derivative.
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Answer Posted / yy
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.
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