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Derivative Financial Glossary

What is it? A financial contract where the value is derived from an underlying security or index. It is an agreement by the investor to buy or sell the underlying asset in the future at a set price. The value of the derivative is based on the anticipated future movements in the stock price. Derivatives either trade on a formal exchange or over-the-counter between parties in an unregulated transaction.

Finance Term Definition Added By: Jayden

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