Derivatives is a financial tool derived from another property, code, event, price, or condition. Instead of trading or exchanging the underlying property, the derivative trader may from time to time agree to convert the cash or assets based on the underlying asset. A simple example of this is a futures agreement, which is a contract based on the conversion of an underlying asset at a future date. Profits can be evaluated if the value of the underlying asset changes as investors expect. Investors can use derivatives for profit. Alternatively, traders can lessen or minimize the risk of the elementary asset by entering into a derivative agreement with derivatives moving the price in the opposite direction of their base position. An offspring is an agreement whose origin is derived from a basic property. Many generally used tools are called derivatives because they are derived from one property. For example, equity stocks are derivative because they are derived from basic equity. Similarly, an individual takes out insurance for his home so that he can protect himself from all the threats that may arise in the home.

Prachi Garg

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