Derivative instrument

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Revision as of 13:26, 18 April 2014 by imported>Doug Williamson (Added 1 line space before see also)
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A derivative instrument or contract is one whose value and other characteristics are derived from those of another asset or instrument (sometimes known as the Underlying Asset).

For example, a share option is a type of derivative contract, allowing the holder to buy shares at a certain predetermined strike price. The value of the share option derives from the current price of the related underlying share relative to the option strike price.


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