(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.A person who learns about money only to find that people make random emotional decisions. The sacrificial lamb of the urban jungle. When financial markets are up, even the most ignorant advisor looks like a hero. When markets are down, the most professional and savvy advisor will be trash talked, fired and sued.
Hey, how come you're driving that piece of crap car?
I was a financial advisor in 2008.
Hey, who's that guy in the Mercedes?
That was a financial adviser who retired in 2007.
I was a financial advisor in 2008.
Hey, who's that guy in the Mercedes?
That was a financial adviser who retired in 2007.
by Bluetired February 19, 2010
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A group of people who are in the middle of a class action lawsuit, because they conned a bunch of clients into investing in funds that would mostly benefit the advisor.
If you get a phone call from an American Express Financial Advisor, my advise to you is to run. These advisors live in nice homes off of "your" money
by Conned October 15, 2008
Get the American Express Financial Advisor mug.The fetish/fantasy/lifestyle act of one person being submissive with their finances (giving money) and the other person taking or demanding finances(receiving money).
by Mistress Claire Dollface February 12, 2017
Get the Financial Domination mug.Financial Terrorists can be one person, group of people,small medium or large corporations that can get the government to not make laws or regulations to protect the general population from their greed and corruption
When Goldman-sachs prevented our government from regulating derivatives, and changed banking laws to under capitalize from leveraging savings from 1:4 to 1:40 or more, Goldman-sachs became "Financial Terrorists" against every non 1%er on earth. These monsters make loans to people, then bet against them, then raise the loan rate until the person defaults on the loan.
by Dr. Dave*** January 1, 2012
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Due to financial erosion, I opted to not maintain my property while I scrape up the cash to pay the property taxes.
by Stephan Smolka January 6, 2009
Get the financial erosion mug.1.what the middle class cannot get and therefore, they are screwed when they need to go to college. Middle class is toor poor for ai, but not rich enough to afford it.
by hithere April 25, 2005
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