A derivative is a financial tool that can be used to manage risks in the stock market.

Name: A derivative is a financial tool that can be used to manage risks in the stock market.
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A derivative (sometimes called a derivative contract and sometimes a derivative instrument) is a financial tool the value of which emerges from a variable item, such as an interest rate, a stock index, or a commodity like fuel or crops. Derivatives can be used to manage risk as long as they are handled properly.

A Derivative Is a Financial Tool That Can Be Used