In finance, a derivative is a contract that derives its value from the performance of an underlying entity. This underlying entity can be an asset, index, or interest rate, and is often simply called the "underlying".
A derivative is a financial contract with a value that is derived from an underlying asset.Derivatives have no direct value in and of themselves -- their value is based on the expected future price movements of their underlying asset.
A futures exchange or futures market is a central financial exchange where people can trade standardized futures contracts; that is, a contract to buy specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future.
A swap is a derivative contract where two parties exchange financial instruments. Most swaps are derivatives in which two counterparties exchange cash flows of one party's financial instrument for those of the other party's financial instrument.
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