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CEFR C1 — Advanced

Derivatives

Definition

(formal) Financial instruments that derive their value from the value of an underlying asset, such as a commodity, currency, or stock, and are used to manage risk or speculate on price movements.

Example Sentences

1Investors often use derivatives to hedge against potential losses in their portfolios.
2Can you explain how derivatives are used in currency trading?
3The company's financial reports revealed extensive use of derivatives to manage risk, but the strategy ultimately backfired.
4Regulators have been working to increase transparency in the derivatives market to prevent another financial crisis.
5The use of derivatives in agriculture allows farmers to lock in prices for their crops and reduce uncertainty.

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