DERIVATIVE
AS- 30/31/32
A derivative is
- a financial instrument or other contract
- with all three of the following characteristics:
a) its value changes in response to the change in an underlying variable
(such as a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of prices or rates, credit rating or credit index, or other variable )
b) it requires no initial net investment
( or an initial net investment that is smaller than would be required for other types of contracts that would be expected to have a similar response to changes in market factors); and
c) it is settled at a future date.
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