Really Dumb



Derivat is a type of financial product, like stocks or bonds. It is an agreement between two parties, often a buyer and a seller, to exchange money at some point in the future. Derivat agreements are based on some underlying asset, such as stocks, bonds, commodities, or currencies. Here’s an example of a derivat agreement: Let’s say that you think the stock price of Company X will go up in the future. You could enter into an agreement with someone else to buy that stock at a set price. If the stock price rises, then you can turn around and sell the stock at the higher price and make a profit. An analogy to explain this concept is like taking a bet on a horse race. You can bet on a certain horse to win, and if it does, you get paid out. Similarly, if you think the stock price of a company will rise, you can enter into a derivat agreement and make a profit if the stock price goes up. Fun Fact: Derivat agreements are often used by large companies and banks to manage their investments and risks.