Derivatives are nothing but a type of agreement on a document among any two individual parties. This contract specifies the particular conditions like the scheduled dates, values in output and also the defining meanings of the basic varying quantities, etc. They are the terms which form the basic foundation of the payments that are to be transacted between the two teams concerned.

The assets for which this contract is being signed by the two groups consist of stocks, commodities, bonds, currencies and interest rates. But in this dynamic system, there is a possibility of a lot of different kinds of derivatives and this adds a new and different plate of complex issues to provide an authentic and accurate evaluation. 

When we take a look by having an economic level of mindset we find out that the derivatives of finance are nothing but the transaction of cash between the parties interested in trade. The risk in the  marketing is the basic inherited trait that is somehow present in the basic commodity that is joined to the derivative of finance via an agreement on the basis of contract and therefore it is eligible to perform the trading task independently and separately without any further dependency. The basic commodity or the asset needs not to be gained. 

About the Derivatives we can say that, as they are contracts which enables the breaking or separation of one’s ownership and the level of participation performed by them in the market and according to the price of a stock. There are mainly two types of groups present of these derivative agreements. 

First is, over-the-counter (OTC) that trades in a private manner and the second one is exchange-traded derivatives (ETD)

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