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What are derivatives?
A derivative refers to a security. The price is determined on the basis of one or other assets like stocks, various kinds of bonds, currencies and the like. It is a kind of a contract between two or a large number parties and the whole scenario is assessed based on one asset or more than that. Since the value of the underlying assets is not a constant thing, the value is assured based on the fluctuations observed at a given time. Derivatives as a financial instrument are very common and have been there for ages facilitating contracts between merchants.
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