Derivative – Definition and Types

Derivative is a financial instrument whose value is derived from an underlying asset. Fluctuation in these underlying assets decides the price of derivative as its price is dependent upon the price of underlying asset.

Often stocks, bonds, commodities, currencies, interest rates and market indexes are considered as underlying assets.

Future, option, forward and swaps are most common type of derivatives.

Author: Vikas Yadav

Vikas Yadav is the chief author at MonetarySection. He is an MBA (finance) from NCU Gurgaon. He started his career in 2014 and at the same time he started this website to educate people about finance.

Leave a Reply

Your email address will not be published. Required fields are marked *