Manu Murthy Asked: August 31, 20212021-08-31T19:50:20+05:30 2021-08-31T19:50:20+05:30In: FinanceWhat Do You Mean By Derivatives? Give An Example.What Do You Mean By Derivatives? Give An Example.derivatives 1 AnswerVotedOldestRecent Anonymous 2021-08-31T19:52:49+05:30Added an answer on August 31, 2021 at 7:52 pm DerivativesA derivative is the contract between a buyer and a seller where the seller agrees to purchase the underlying securities at a specified price and time in the future.Derivatives means investment that is used to trade price risk. It will buy/sell derivatives that increase or reduce the price risk on the stated securities. Derivatives market is mostly operated in electronic trading, OTC and brokerage markets.Derivatives means the transaction where different types of securities of one company are traded. Most commonly, this is done through Exchange Traded Funds (ETF), Notes and Options. In derivatives, stocks are exchanged for different types of instruments like CDS (Credit Default Swaps), Equity indices, Commodities and Interest rates.Why To Use Derivatives?Derivatives market helps businesses to reduce their operational costs. The cost of derivatives is reduced by the lowest transaction costs. It also increases margins and promotes market efficiency. Derivatives market enables businesses to diversify their risk while maintaining the original value.Here are the types of derivative:Credit DerivativesInterest Rate DerivativesCommodity DerivativesCurrency DerivativesFinancial DerivativesAsset Swap DerivativesForeign Exchange Derivatives3Reply Share ShareShare on FacebookShare on TwitterShare on LinkedInShare on WhatsAppLeave an answerLeave an answerCancel reply Featured image Select file Browse Add a Video to describe the problem better. Video type YoutubeVimeoDailymotionFacebook Choose from here the video type. Video ID Put Video ID here: https://www.youtube.com/watch?v=sdUUx5FdySs Ex: "sdUUx5FdySs". Answer Anonymously Save my name, email, and website in this browser for the next time I comment. Related Questions What is one cost of avoiding health insurance? The main focus of NIH's conflict of interest policy is: What is QuickBooks and how much does it cost? What are the important terms in stock market? How do I start investing in the stock market as a beginner? What is the best way to earn money in the stock market? How does the stock market work? Who decides the price of stocks? What is the logic behind the valuation of ... Which is better and why: term or whole life insurance?