(FINANCE) a financial instrument whose value is tied to something else; for example,
* a futures contract (future)
* an option
* a swap
In each of these examples, the value of the derivative is related in some way to the price of something else. When the market price of (say) an ounce of gold goes from $1000/oz to $1050/oz, the return to the owner of 1 oz. of actual gold is 5%. But for the owner of a call option or a future, the return is much, much greater than that.
A derivative can be used to multiply risk AND potential profits to speculators; but it can be used for the counterparty to minimize risk by locking in prices, or by hedging against risk.
* a futures contract (future)
* an option
* a swap
In each of these examples, the value of the derivative is related in some way to the price of something else. When the market price of (say) an ounce of gold goes from $1000/oz to $1050/oz, the return to the owner of 1 oz. of actual gold is 5%. But for the owner of a call option or a future, the return is much, much greater than that.
A derivative can be used to multiply risk AND potential profits to speculators; but it can be used for the counterparty to minimize risk by locking in prices, or by hedging against risk.
by Abu Yahya April 5, 2010
Get the financial derivative mug.Quiz: Find the derivatives of the following.
#1: e^(-2coscsc4x)(4pitan/-7secx)^cos6x.
Me: *blank stare*
#1: e^(-2coscsc4x)(4pitan/-7secx)^cos6x.
Me: *blank stare*
by Sid Barrett December 9, 2008
Get the Derivatives mug.Related Words
In Paper Town, Margo Roth Spiegelman's made up word instead of Depilated
To remove someone or something's hair
To remove someone or something's hair
by Tiu Teong July 9, 2019
Get the depilatated mug.School Playground Bully: "Shut the fuck up and gimme yo money. And yo lunch, nigga."
Poor Playground Nerd: "Um, no hey! YOU shut up, you third derivative!"
<School Playground Bully runs away squealing like a little girl.>
Poor Playground Nerd: "Um, no hey! YOU shut up, you third derivative!"
<School Playground Bully runs away squealing like a little girl.>
by Leah November 25, 2003
Get the third derivative mug.What generally spews of the mouth of a calculus student when they have no fucking clue what all the squiggly lines mean and don't happen to be Asian.
by Not A freaking Asian math nerd November 26, 2013
Get the Derivative of fuck mug.Note: This definition of derivative is alternate to the mathematical type of derivative.
Along the lines of an integral but much more common. To take a derivative, take something that does something and do what it does back to that same thing. For clarity see examples.
Along the lines of an integral but much more common. To take a derivative, take something that does something and do what it does back to that same thing. For clarity see examples.
A: I just took a derivative by cutting a knife.
B: Well I just took a derivative by taking a picture of a camera.
C(Math Major): What the hell are you two talking about?
B: Well I just took a derivative by taking a picture of a camera.
C(Math Major): What the hell are you two talking about?
by Deriffirmitive May 16, 2009
Get the Derivative mug.Not original, over-used.
Donatello from Ninja Turtles, "Too derivative"
Yo, that old navy shirt is too derivative. It's one solid color with a horizontal line of another color.
Yo, that old navy shirt is too derivative. It's one solid color with a horizontal line of another color.
by Bruce April 11, 2005
Get the derivative mug.