Economics Derivatives Questions
Derivatives in economics refer to financial instruments or contracts whose value is derived from an underlying asset, such as stocks, bonds, commodities, or currencies. These instruments include options, futures, forwards, and swaps, which are used by individuals, businesses, and financial institutions to manage risk, speculate on price movements, or hedge against potential losses. Derivatives allow investors to gain exposure to the underlying asset without owning it directly, providing opportunities for profit or protection against adverse market conditions.