Answer Posted / priyanka
Derivative is the product whose value is derived from or
more basic variables ,called underlying .The underlying
asset can
be equity ,index foreign exchange (forex),commodity or an
asset .
Derivative products initially emerged as hedging devices
against fluctuations in commodity - linked derivatives
remained the sole form of such products for almost three
hundred years .The financial derivatives came into spotlight
in post 1970 period due to growing instability in financial
markets .However ,since their emergence these products have
become very popular and by 1990's they accounted for about
two- thirds of total transaction in derivative products.
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