derivative, n.
1. A financial instrument whose value depends on or is derived from the performance of a secondary source such as an underlying bond, currency, or commodity.
— Also termed derivative instrument.
“Derivatives transactions may be based on the value of foreign currency, U.S. Treasury bonds, stock indexes, or interest rates. The values of these underlying financial instruments are determined by market forces, such as movements in interest rates. Within the broad panoply of derivatives transactions are numerous innovative financial instruments whose objectives may include a hedge against market risks, management of assets and liabilities, or lowering of funding costs; derivatives may also be used as speculation for profit.” Procter & Gamble Co. v. Bankers Trust Co., [1996–1997 Transfer Binder] Fed. Sec. L. Rep. (CCH) ¶ 99,229, at 95,238 (S.D. Ohio 1996).
2. See derivative work under WORK(2).