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Derivatives
What is a derivative instrument in finance?
A derivative is a financial contract whose value is derived from an underlying asset such as stocks, bonds, commodities, currencies, interest rates, or market indices.
What is a commodity derivative?
A derivative whose underlying asset is a physical commodity.
What are the four main types of derivative contracts?
The four main types are forwards, futures, options, and swaps, each differing in their structure, obligation, and settlement mechanism.
What is the underlying asset in a derivative contract?
The asset on which the derivative's value is based.
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