Derivatives

It is an instrument which derive its value from base item.

for example curd is a derivative then milk is base item,up down in price of milk affect the price of curd also.

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Obviously!! this is the best example one can give for derivatives.

Let me put it in my words.

the word derivative means unoriginal or copied from somewhere n not origianl.

in simple words derivative is a financial product whose value depends on some other asset.

eg milk-curd-buttermilk-butter-ghee.

the price of all these depends on the price of milk. they dont hav a stand alone price. the price of these DERIVATIVES is said to be DERIVED from the price of the underlying asset (say milk).