What are Financial Derivatives?
The simplest way to explain a derivative would be to say that it is a financial agreement between two parties. It derives its value from a real good or type of stock. The value of these financial derivatives will be based on the future expected price for something. So in a lot of cases the person selling the derivative will agree to provide something in the future at a price that is agreed upon now. Some people will use this as a form of investment in the hope of making a lot of money in the future.
