A derivative is a security with a price that is dependent upon or derived from one or more underlying assets.
 | | Derivative | | A derivative is a financial security with a value that is reliant upon or derived from an underlying asset or group of assets. The derivative itself is a contract between two or more parties based upon the asset or assets. Its price is determined by fluctuations in the underlying asset. The most common underlying assets include stocks, bonds, commodities, currencies, interest rates and market indexes. | | Breaking it Down: | | Originally, derivatives were used to ensure balanced exchange rates for... | | Read More » | | Price Swap Derivative | | Under a price swap derivative, one entity delivers stock, or other collateral, to guarantee a fixed value for the total asset holdings of another entity. | | Read More » | | | Underlying | | Underlying, in equities, refers to the common stock that must be delivered when a warrant is exercised, or when a convertible bond or convertible preferred share is converted to common stock. | | Read More » | | | Credit Default Swap Index (CDX) | | The credit default swap index (CDX)—formerly the Dow Jones CDX—is a financial instrument composed of a set of credit securities issued by North American or emerging markets companies. | | Read More » | | | | | | CONNECT WITH INVESTOPEDIA | | | | | | | |
