Derivative
Derivative is a claim whose value depends on what happens to the value of some other asset. Futures and options are two important types of derivatives, and their values depend on what happens to the prices of other assets. Therefore, the value of a derivative security is derived from the value of an underlying real asset or other security.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Derivatives. Claims whose value depends on what happens to the value of some other asset. Futures and options are two important types of derivatives, and their values depend on what happens to the prices of other assets. Therefore, the value of a derivative security is derived from the value of an underlying real asset or other security.
According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),
- Derivatives. Any financial asset whose value is derived from the value of some other "underlying" asset. Derivatives are securities whose values are determined by the market prices or interest rates of other assets.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
