- An agreement or financial instrument whose value is based on the value of another asset, such as a different security, or based on a rate like interest or foreign exchange, or an asset value index like a stock index
- Something that originates from, or is dependent on the existence of, something else
- Something that is connected with or pertaining to a derivative
- The company decided to hedge against potential loss by investing in a derivative linked to foreign currency exchange rates.
- The essence of a derivative concept is it relies entirely on the existence of the original concept.
- When dealing with a financial instrument, it’s crucial to understand whether it is a derivative or not.