Derivative Instrument (Noun)
Meaning
A financial instrument whose value is based on another security.
Classification
Nouns denoting communicative processes and contents.
Examples
- The company's portfolio included a range of derivative instruments, such as options and futures contracts, which were tied to the performance of various stocks and commodities.
- The investor purchased a call option, a type of derivative instrument, that gave her the right to buy a certain stock at a predetermined price.
- Derivative instruments, such as credit default swaps, can be used to hedge against potential losses or to speculate on market movements.
- The hedge fund's use of derivative instruments, including swaps and forwards, allowed it to take on significant exposure to the market while minimizing its capital outlay.
- The exchange-traded fund invested in a variety of derivative instruments, including futures and options, to track the performance of a specific market index.