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financial derivative
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financial derivative


I avoid investing in financial derivatives I don’t understand.
  a tradable financial product whose value depends on something else — usually the value of a commodity or a rate (such as interest, or currency rate), but it could be anything; e.g., the weather

often shortened to "derivative"; though that word can have different meanings depending upon the context
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financial derivatives financial derivative
Notes:
Derivatives help the economy by moving the risk of future events to those who can best afford them. As derivatives grow increasingly complex, they create more opportunity for shifting risk, but increase the chances that sellers and buyers will not adequately understand their exposure. For example, the firm, Long-term Capital, was thought to be the leader in derivatives between 1994 and 1998. The firm was highly leveraged and lost $4.6 billion in less than four months in 1998.
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  • I avoid investing in financial derivatives I don’t understand.
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Associated words [difficulty]:   financial derivative , Individual Retirement Account (IRA) [3] , bond [4] , financial commodities [5] , stock [7] , mutual fund [8] , hedge fund [9] , municipal bond [9]
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Most commonly used in these subjects:   Business, Personal Finance, Public Policy & Politics
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