Derivative (finance)

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In finance, a derivative is a special type of contract. In it, the two parties agree to sell (or to buy) certain goods, at a given price, on a given date. Derivatives can be used as an instrument of speculation: One party "bets" that the price of a certain good will be at a certain level, on a given date. The other option is to use them as a form of insurance, which is also called hedge. One of the oldest derivatives is rice futures, which have been traded on the Dojima Rice Exchange since the eighteenth century.[1]

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