A financial instrument whose value depends, at least in part, on the value of a
related asset or liability. In essence, its value is "derived" from
the values of some underlying asset such as a commodity or stocks. For example,
if an individual or business owns an option to purchase 1,000 shares of a
particular stock at a set price, the value of the option will increase as the
value of the stock increases. Risk managers and financial officers often deal
in derivatives as a technique for managing their business risks.