What is financial derivative (in a b. o. p. context)?
financial derivative (in a b. o. p. context) definition and meaning on Finance terms:
A financial instrument that is linked to another specific financial instrument, indicator or commodity and through which specific financial risks (such as interest rate risk, foreign exchange risk, equity and commodity price risks, and credit risk) can be traded in financial markets in their own right. The value of a financial derivative is based on the price of an underlying item, such as an asset or index. No principal amount that has to be repaid is advanced, and no investment income accrues. <