Answer / dee

it is a financial instrument whose characteristics and
value depend upon the characteristics and value of an
underlying asset,can typically be a commodity, bond, equity
or currency....

Answer / farzana

Derivatives defines as a forward,future and option contract
of predetermined fixed duration for the pupose of the
contract fulfilment to the value of specified real or
financial asset or to index securities.

Answer / s balasubramanian

Derivatives are used in the Stock exchange, Commodity market
etc. It derives from another on the expectation of either
rise or fall in its values. In Stock market, both options
and futures are derivative instruments. In futures, the
stock exchanges fix the market lot and for particular
market lot, the investor can buy futures for a contract
period of 1-month. In case the price of particular stock
goes up, either the investor can sell for a higher price or
take delivery based on the booked price on the expiry date
i.e., last Thursday of any month. The investor need not
pay entire amount as in Cash segment in Futures. He needs
to pay the margin money of 14 to 18% of the stock value as
prescribed for a lot fixed and at the time of taking
delivery, he needs to pay the full amount. At the time of
taking delivery, the amount would be in lakhs due to heavy
lot. In case the price goes lower for any particular
stock, the investor needs to maintain the margin amount
accordingly and he bears the loss also. He can carry
foward the future by paying more margin money to the next
cycle also. In futures, either he can sell it or necessary
to take delivery on the expiry period.
In option, one can buy or sell either call option or put
uption, in bullish or bearish market. He cannot extend the
option beyond a month and either he can sell or exercise
the option for buying the shares at the strike price.

One has to experiment the Futures and Option trading and do
it cautiosly. Both gains and losses are unlimited.

Answer / vasavi

Ans: A derivative is anything that is valued based upon some
other asset. In other words, it derives its value from
something else.For example: In the case of GE stock options,
for instance, whether the stock option makes money, loses
money, or breaks even depends entirely upon what General
Electric shares do. Thus, the options “derive” their value
from GE stock. They are a derivative.

Answer / swathi nayak

Derivatives are the financial instruments where the value
of an asset is derived through the value of an underlying
asset.

Answer / nithila

Derivative is a synthetic instrument.which derive value from
the underlying asset class.

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