What is Derivatives ?

A derivative is a financial security with a value that is reliant upon or derived from, an underlying asset or group of assets—a benchmark. The derivative itself is a contract between two or more parties, and the derivative derives its price from fluctuations in the underlying asset.

The most common underlying assets for derivatives are stocks, bonds, commodities, currencies, interest rates, and market indexes. These assets are commonly purchased through brokerages.

Derivatives can trade over-the-counter (OTC) or on an exchange. OTC derivatives constitute a greater proportion of the derivatives market. OTC-traded derivatives, generally have a greater possibility of counterparty risk. Counterparty risk is the danger that one of the parties involved in the transaction might default. These parties trade between two private parties and are unregulated.

डेरिवेटिव एक वित्तीय सुरक्षा है जिसका मूल्य किसी अंतर्निहित परिसंपत्ति या परिसंपत्तियों के समूह-एक बेंचमार्क पर निर्भर या उससे प्राप्त होता है। डेरिवेटिव स्वयं दो या दो से अधिक पार्टियों के बीच एक अनुबंध है, और डेरिवेटिव की कीमत अंतर्निहित परिसंपत्ति में उतार-चढ़ाव से प्राप्त होती है।

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