what is a derivative finance
By Jean Folger AAA |. A: A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset, index or security.Common underlying instruments include: bonds, commodities, currencies, interest rates, market indexes and stocks.y Jean Folger AAA |. A: A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset, index or security.