2 Replies
Ajay Vikram Bochiwal
(Internal Auditor)
(52 Points)
Replied 18 June 2010
It is an instrument which derive its value from base item.
for example curd is a derivative then milk is base item,up down in price of milk affect the price of curd also.
you can log in to www.bseindia.com or www.nseindia.com for detail study of derivative.
Aswathy
(CS)
(175 Points)
Replied 19 June 2010
Obviously!! this is the best example one can give for derivatives.
Let me put it in my words.
the word derivative means unoriginal or copied from somewhere n not origianl.
in simple words derivative is a financial product whose value depends on some other asset.
eg milk-curd-buttermilk-butter-ghee.
the price of all these depends on the price of milk. they dont hav a stand alone price. the price of these DERIVATIVES is said to be DERIVED from the price of the underlying asset (say milk).
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