What is a derivative and the difference between a derivative and a non derivative

A derivative instrument is a financial instrument or other contract that falls within the scope of the Financial Instruments Standards and has the following characteristics at the same time.

A characteristic: its ** changes with the change of a particular interest rate, financial instrument**, commodity **exchange rate** index, rate index, credit rating credit index or other variable, if the variable is a non-financial variable, the variable should not have a specific relationship with either party to the contract.

The second feature is that no initial net investment is required or a smaller initial net investment is required than other contracts that are expected to react similarly to changes in market factors.

The third feature: settlement at a future date.

Non-derivatives are financial instruments.

The basic instruments (parent instruments) in the general financial market, including currencies, bonds, and convertible bonds.

**Wait. Derivatives are another type of financial transaction derived (derived) from the underlying instrument, that is, a transaction constituted or derived from another (**, bond, currency or commodity). Derivatives and non-derivatives are generally easy to distinguish.

The value of derivatives depends on the value of other financial variables or financial instruments, while non-derivatives do not have this characteristic and rely on their own value and do not depend on the value of other financial instruments.

Extended Information] In real life, financial instruments can be seen everywhere. For example, it is easy for you to think of those investment instruments such as bonds or ** in the market, and you can even think of the risk or risk of investing in financial instruments"Trapped"。However, from the perspective of accounting standards for financial instruments, it is still necessary to give a definition of financial instruments.

Because people think of the word financial instrument and think of ** or bond investment, some people have simply defined financial instruments as some financial assets held by enterprises.

In fact, if you look at the issuer of financial instruments, where the holder of the financial instrument is an asset, the issuer is often a liability or listed in the owner's equity.

in the share capital. **Wait. Commercial bank A issues bonds, and insurance company B buys them, and bonds are liabilities for commercial bank A, but bond investment (financial assets) for insurance company B.

By extension, from the perspective of accounting standards, financial instruments refer to contracts that form the financial assets of an enterprise and form financial liabilities or equity instruments of other units. Why the definition of financial instruments settles in"Contracts"This is because the initial existence of a financial instrument must involve both the issuer and the recipient, and the two parties enter into a transaction in the form of a roll-off contract, and the termination of this contract is the corresponding financial instrument"Extinction"of the point in time.

Currency is a non-derivative instrument and is a financial asset to the person holding it. It represents the medium of exchange and can be simply understood as a kind of contract between the holder and **. Deposits in a bank or similar financial institution are also non-derivative instruments and represent a contractual right of the depositor to receive cash from the institution or to issue cheques or similar instruments based on the balance of his deposit to satisfy financial liabilities.

Secondly, non-derivatives can also be found in pairs, such as accounts receivable.

and accounts payable, notes receivable and notes payable, bonds receivable and bonds payable, and other receivables.

and other payables, long-term equity investments.

and shares of large holes, etc. In addition, there will also be some situations where non-derivatives are difficult to judge.

Common derivatives include (options, **, swaps).

Financial derivatives generally refer to derivative financial assets. Derivative financial assets are also called financial derivatives (financial derivatives), financial derivatives, also known as "financial derivatives", so what are the financial derivatives? In real life, there are two ways to classify FDIs:

First: product type.

1. Forward: The two parties to the transaction buy and sell a commodity or asset on a certain day in the future according to the agreement on the day, and the transaction date is far in the future.

2. **: Standardized forward contracts.

3. Option: A contract signed by the seller and the buyer is the right of the buyer and the seller to sell the underlying assets at a certain date (or before) in the future.

4. Swap: buy spot foreign exchange in the foreign exchange market and sell forward foreign exchange of the same currency at the same time, or sell spot foreign exchange and buy forward foreign exchange of the same kind of leaky front currency at the same time.

The second type: the nature of the primary asset.

1. Category: Based on the index.

2. Interest rate: the interest rate or the carrier of the interest rate is used as the basic tool.

3. Currency: Various currencies are used as basic tools.

4. Credit: The credit risk or default risk contained in the underlying product is used as the basic variable as a financial derivative instrument.

Derivatives are a special type of financial instruments that are bought and sold, which refers to financial instruments or other contracts that fall within the scope of financial instruments standards and have certain characteristics at the same time. Common derivatives include forward contracts, ** contracts, swap contracts, and option contracts.

Derivatives are characterized by changes in value in response to changes in specific interest rates, financial instruments**, commodities**, exchange rates, indices, rate indices, credit ratings, credit indices or other variables. If the variable is a non-financial variable, the variable should not have a specific relationship with any party to the contract; Derivatives do not require an initial net investment, or a smaller initial net investment than the original and the derivatives settle at a future date.

1.Derivatives are a special type of financial instrument. The rate of return on this trade** is higher than that of a number of other financial factors.

Such as assets (commodities, or bonds), interest rates, exchange rates, or various indices (** indexes, consumption indices, weather indices). The performance of these factors will determine the rate of return and the timing of the return of the derivative. The main types of derivatives are **, options, warrants, forward contracts, swaps, etc.

2.Non-derivatives are the parent instruments of financial crude instruments, that is, the basic financial instruments in the general financial market, including currencies, bonds, convertible bonds, **, etc. Tips:

Entering the market is risky, and investment needs to be cautious.