Derivative security

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Derivative security

A financial security such as an option or future whose value is derived in part from the value and characteristics of another security, the underlying asset.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Derivative Security

Futures, forwards, options, and other securities except for regular stocks and bonds. The value of nearly all derivatives are based on an underlying asset, whether that is a stock, bond, currency, index, or something else entirely. Derivative securities may be traded on an exchange or over-the-counter. Derivatives are often traded as speculative investments or to reduce the risk of one's other positions. Prominent derivative exchanges include the Chicago Mercantile Exchange and Euronext LIFFE.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
References in periodicals archive ?
16, 2014), http://www.bankrate.com/fmance/investing/are-liquid-altemative-mutual-funds-worth-it.aspx (noting that many mutual funds now transact in futures and other deriviatives and that their doing so "obviously brings in risk, and the average investor loses the ability to understand").
We also noted that only 23% could draw a distinction between artemisinin deriviatives monotherapies and their combination therapies.
The Obama administration's draft proposal for the rule would ban firms from trading on stocks, bonds, options, commodities, deriviatives or other financial instruments for the company's own trading book and not on behalf of the customer.