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Derivative (financial)

A tradable security whose value is derived from the actual or expected price of some underlying asset, which may be a commodity, a security, or a currency. Derivatives include futures contracts, futures on stock market indices, options, and swaps. Derivatives can be used as a hedge, to reduce risk, or for speculation. A derivatives market is a market such as the London International Financial Futures and Options Exchange on which derivatives are traded.

Reference: Oxford Press Dictonary of Economics, 5th edt.