what type of securities are derivatives
Many investors use derivative securities as a way to hedge their investment portfolios against certain risk. A derivative security derives its value from another underlying financial security.Derivative securities come in several types, including forward, future, swap and option contracts.Derivatives are considered sophisticated financial securities, so it is important for investors to understand how they work and the benefits and risks associated with them. swap is a type of derivative security in which investors swap one set of cash flow for another set of cash flow. A currency swap is a common type of swap in which parties enter a contract to exchange streams of cash flow denominated in two currencies.