What are derivative investments?
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A derivative is a contractual agreement which derives its value from an underlying financial product or asset. The underlying assets used in derivatives include interest rates, stocks, bonds, foreign exchange currencies, commodities and credit. Derivatives are traded either over-the-counter (OTC) or on an exchange and are used for a variety of reasons, by primarily sophisticated investors and institutions, including for hedging, speculation, arbitrage, leverage and portfolio management purposes.
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