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derivative

derivative

66 9.5
A financial product whose value changes with another asset, like a stock
  • noun
  • /dɪˈrɪvətɪv/
  • Specialized
translation icon : derivado
  • In finance, a derivative is a contract whose value is based on the performance of an underlying asset, like a stock.
  • derivatives market
  • financial derivatives
  • derivative contract

The most common types of derivatives contracts are forwards.

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Examples

  • So put options are called derivative securities.

  • And Congress had no choice but to break up the big banks and regulate the mortgage and derivatives industries.

  • I should add that a derivative is a financial contract that derives from another financial.

  • Our credit process is traditional, and we are not involved in credit derivatives.

    Academic text (2009)
  • This is an example of a derivative contract that injects a lot of complexity into financial theory.

  • I'm a partner in a derivatives-trading company in Geneva.

  • Oil and its derivatives account for 50 percent of Saudi electricity production, mostly for residential use.

    Academic text (2013)
  • The most common types of derivatives contracts are forwards.

  • In May of 1998, the CFTC issued a proposal to regulate derivatives.

  • By the late 1990s, derivatives were a 50-trillion-dollar unregulated market.

Synonyms

derivative instrument
vsderivative
  • Specialized
8.7

A financial product whose value comes from something like a stock or bond

is the same in meaning but uses an alternative technical label

Compounds

OTC derivative
  • Specialized
1 9.9

A financial contract privately negotiated and traded between two parties, not on an exchange

first derivative
  • Specialized
1 7.9

How fast one value changes compared with another at a particular point

1 9.9

A private financial contract made between two parties, not traded on a public exchange

derivative instrument
  • Specialized
8.7

A financial product whose value comes from something like a stock or bond

partial derivative
  • Specialized
8.7

How fast a function with two or more variables changes when one variable changes and others stay the same

Surface Forms

derivative singular
derivatives plural

Morphology

derivative = derive (semi-transparent) = derive + ative

Financial 'derivative' literally means an instrument 'derived from' another asset, but the market-specific implications are technical.

Etymology

Derivative in finance uses the same root derivare ('from' + 'stream'). A financial derivative is called that because its value is 'drawn from' the value of another asset, so it depends on that other asset.