A derivative is a financial contract which derives its
value from the performance of another entity such as an asset, index,
or interest rate, called the "underlying". Derivatives are one of the
three main categories of financial instruments, the other two being
equities (i.e. stocks) and debt (i.e. bonds and mortgages).
Derivatives
include a variety of financial contracts, including futures, forwards,
swaps, options, and variations of these such as caps, floors, collars,
and credit default swaps. Most derivatives are marketed through
over-the-counter (off-exchange) or through an exchange such as the
Chicago Mercantile Exchange; while most insurance contracts have
developed into a separate industry.
