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Answer Posted / babhu kanchupalli
Derivative is an asset which valu is derived from the another asset called underlying asset.
For example : Two persons A&B made a bet on a cricket match for 500 rs.once loss will be the another persons gain vice versa.Here indirectly they made a contract i.e cost of 500 rs.This contract is called derivative.The value of this contract is depends on the result of match,that is the underlying asset(match result).
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