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what is the meaning of derivative.
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Answer Posted / sandeep gahlot
Derivative is a financial assets whose value is derived
from the other underlying assets( Share/commodity/debenture
etc.). In other word it is a contract between two or more
parties to exchange the thing at predetermoned rate and
date to minimise the risk.
Example :- A farmer sign a contract with wheat buyer to
sale the wheat in future at particulars date and rate. By
this way both parties are trying to minimise their risk.
Farmer covering the risk of low price and buyer covering
the risk of unavalability of wheat.
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