derivative

noun
de·​riv·​a·​tive | \ di-ˈri-və-tiv How to pronounce derivative (audio) \

Definition of derivative

 (Entry 1 of 2)

1 linguistics : a word formed from another word or base : a word formed by derivation "pointy," "pointed," and other derivatives of "point"
2 : something derived … the sonata form (itself a derivative of opera) …— Kingsley Martin the name "Mia" is a derivative of "Maria"
3 mathematics : the limit of the ratio of the change in a function to the corresponding change in its independent variable as the latter change approaches zero

4 chemistry

a : a chemical substance related structurally to another substance and theoretically derivable from it
b : a substance that can be made from another substance Petroleum is a derivative of coal tar. soybean derivatives
5 : a contract or security (see security sense 3) that derives its value from that of an underlying asset (such as another security) or from the value of a rate (as of interest or currency exchange) or index (see index entry 1 sense 1b) of asset value (such as a stock index)

derivative

adjective

Definition of derivative (Entry 2 of 2)

1 linguistics : formed from another word or base : formed by derivation a derivative word
2 : having parts that originate from another source : made up of or marked by derived elements a derivative philosophy
3 : lacking originality : banal a derivative performance a film using a derivative plot device

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Other Words from derivative

Adjective

derivatively adverb
derivativeness noun

Synonyms & Antonyms for derivative

Synonyms: Noun

by-product, derivate, derivation, offshoot, outgrowth, spin-off

Synonyms: Adjective

secondary, secondhand

Antonyms: Noun

origin, root, source

Antonyms: Adjective

basic, original

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Examples of derivative in a Sentence

Noun

The word “childish” is a derivative of “child.” Tofu is one of many soybean derivatives. Petroleum is a derivative of coal tar.

Adjective

A number of critics found the film derivative and predictable. His style seems too derivative of Hemingway.
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Recent Examples on the Web: Noun

Julian Emanuel, chief equity and derivatives strategist at BTIG, said in a report that the S&P 500 has a shot of climbing as high as 3,250 by the end of the year — a nearly 9% gain from current levels — but only if the US and China make nice. Paul R. La Monica, CNN, "The bull market just won't die," 11 Sep. 2019 Even as more states move to legalize cannabis, mainstream medicine has not reached a consensus on where, if at all, the plant and its derivatives fit in the pharmaceutical pantheon. Shari Rudavsky, Indianapolis Star, "Weed 101: Three Indiana women want to teach doctors about medical cannabis," 29 Aug. 2019 The cost of insuring Ford’s bonds against default jumped in the derivatives market. Los Angeles Times, "Ford’s credit rating cut to junk as Moody’s doubts CEO Jim Hackett’s turnaround plan," 9 Sep. 2019 His nickname — a derivative of his last name, combined with a likeness to the Tasmanian Devil cartoon character — came from his football days. San Diego Union-Tribune, "How a white supremacist shed hate and found redemption," 2 Sep. 2019 Sanders’ debt-canceling initiative would be funded by tax on buying and selling stocks, bonds and derivatives. Trisha Thadani, SFChronicle.com, "Bernie Sanders says SF has made idea of free college ‘less radical’," 23 Aug. 2019 Regulators in the United Kingdom, meanwhile, have proposed a ban on the sale of derivatives and exchange traded notes based on cryptocurrencies because of the risks to consumers. Clare Duffy, CNN, "Facebook gets more official pushback on Libra," 3 July 2019 That would be a shift from the current rule which sets rigid standards that do not differentiate between trading desks that serve different assets, like corporate bonds and derivatives. Emily Flitter And Alan Rappeport, BostonGlobe.com, "Big banks to get reprieve from Volcker Rule," 31 May 2018 Here the approach feels derivative, mostly because the psychology beneath it is so hollow. Caryn James, The Hollywood Reporter, "'The Giant': Film Review | TIFF 2019," 8 Sep. 2019

Recent Examples on the Web: Adjective

To fill the void, broadcasters often favored Zimbabwean musicians whose work was closely derivative of foreign genres such as Jamaican dancehall, an offshoot of reggae. New York Times, "A Music Genre Grows in Zimbabwe, Fueled by Rage Against Authority," 7 Sep. 2019 The movie’s pagan-commune plot is clearly derivative of the horror classic The Wicker Man — the brilliant 1973 version, not the atrocious Nicolas Cage remake. Ross Douthat, National Review, "Midsommar Casts a Transfixing Scandinavian Spell," 25 July 2019 Unlike most others, American doesn’t buy derivative investments as a hedge against fuel spikes, and its relatively heavy debt load leaves it vulnerable if the economy slows for any reason, including a jump in energy prices. Washington Post, "US economy could shrug off oil prices if disruption is brief," 17 Sep. 2019 Houston assistant GM Brandon Taubman went to Cornell and used to work as a derivative valuation expert for Ernst & Young. BostonGlobe.com, "The next great Red Sox team needs to be built to last by a team builder who will last.," 15 Sep. 2019 Delaware’s Judicial Nominating Commission will then interview the applicants, who will be considered simultaneously for a potential derivative vacancy on the Supreme Court if one of the sitting justices is nominated to be chief justice. USA TODAY, "Disney surprise, foreign feral hogs, porous pavement: News from around our 50 states," 13 Sep. 2019 Oh wait, that's a different and very much derivative show. SI.com, "90min's Definitive European Player Power Rankings: International Break Special," 9 Sep. 2019 The shift into the more gnarly thriller territory of the sinister Yates and his goons becomes formulaic, its derivative neo-noir nastiness not helped by distinguished stage veteran Cullum being so miscast. David Rooney, The Hollywood Reporter, "'Jungleland': Film Review | TIFF 2019," 7 Sep. 2019 The one thing that would stop that is if in the agreement, it clearly was stated that Nike couldn’t make any derivative works or new works based off (Leonard’s) original sketch. Patrick Danner, ExpressNews.com, "Nike slaps Kawhi Leonard with counter suit over hand logo," 18 July 2019

These example sentences are selected automatically from various online news sources to reflect current usage of the word 'derivative.' Views expressed in the examples do not represent the opinion of Merriam-Webster or its editors. Send us feedback.

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First Known Use of derivative

Noun

15th century, in the meaning defined at sense 1

Adjective

circa 1530, in the meaning defined at sense 1

History and Etymology for derivative

Noun

see derive

Adjective

see derive

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Statistics for derivative

Last Updated

11 Oct 2019

Look-up Popularity

Time Traveler for derivative

The first known use of derivative was in the 15th century

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More Definitions for derivative

derivative

noun

Financial Definition of derivative

What It Is

A derivative is a financial contract with a value that is derived from an underlying asset. Derivatives have no direct value in and of themselves -- their value is based on the expected future price movements of their underlying asset.

How It Works

Derivatives are often used as an instrument to hedge risk for one party of a contract, while offering the potential for high returns for the other party. Derivatives have been created to mitigate a remarkable number of risks: fluctuations in stock, bond, commodity, and index prices; changes in foreign exchange rates; changes in interest rates; and weather events, to name a few.

One of the most commonly used derivatives is the option. Let's look at an example:

Say Company XYZ is involved in the production of pre-packaged foods. They are a large consumer of flour and other commodities, which are subject to volatile price movements.

In order for the company to assure any kind of consistency with their product and meet their bottom-line objectives, they need to be able to purchase commodities at a predictable and market-friendly rate.  In order to do this, company XYZ would enter into an options contract with farmers or wheat producers to buy a certain amount of their crop at a certain price during an agreed upon period of time. If the price of wheat, for whatever reason, goes above the threshold, then Company XYZ can exercise the option and purchase the asset at the strike price. Company XYZ pays a premium for this privilege, but receives protection in return for one of their most important input costs. If XYZ decides not to exercise its option, the producer is free to sell the asset at market value to any buyer. In the end, the partnership acts as a win-win for both parties: Company XYZ is guaranteed a competitive price for the commodity, while the producer is assured of a fair value for its goods.

In this example, the value of the option is "derived" from an underlying asset; in this case, a certain number of bushels of wheat.

Other common derivatives include futures, forwards and swaps.

Why It Matters

As often is the case in trading, the more risk you undertake the more reward you stand to gain. Derivatives can be used on both sides of the equation, to either reduce risk or assume risk with the possibility of a commensurate reward.

This is where derivatives have received such notoriety as of late: in the dark art of speculating through derivatives. Speculators who enter into a derivative contract are essentially betting that the future price of the asset will be substantially different from the expected price held by the other member of the contract. They operate under the assumption that the party seeking insurance has it wrong in regard to the future market price, and look to profit from the error.

Contrary to popular opinion, though, derivatives are not inherently bad. In fact, they are a necessity for many companies to ensure profits in volatile markets or provide mitigated risk for everyday investors looking for investment insurance.

Source: Investing Answers

derivative

noun

English Language Learners Definition of derivative

 (Entry 1 of 2)

: a word formed from another word
: something that comes from something else : a substance that is made from another substance

derivative

adjective

English Language Learners Definition of derivative (Entry 2 of 2)

usually disapproving : made up of parts from something else : not new or original
: formed from another word

derivative

noun
de·​riv·​a·​tive | \ di-ˈri-və-tiv How to pronounce derivative (audio) \

Kids Definition of derivative

 (Entry 1 of 2)

1 : a word formed from an earlier word or root The word “Childhood” is a derivative of “child.”
2 : something that is formed from something else Gasoline is a derivative of petroleum.

derivative

adjective

Kids Definition of derivative (Entry 2 of 2)

: formed from something else a derivative product

Other Words from derivative

derivatively adverb

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derivative

adjective
de·​riv·​a·​tive | \ di-ˈriv-ət-iv How to pronounce derivative (audio) \

Medical Definition of derivative

 (Entry 1 of 2)

1 : formed by derivation
2 : made up of or marked by derived elements

derivative

noun

Medical Definition of derivative (Entry 2 of 2)

1 : something that is obtained from, grows out of, or results from an earlier or more fundamental state or condition
2a : a chemical substance related structurally to another substance and theoretically derivable from it
b : a substance that can be made from another substance

derivative

noun
de·​riv·​a·​tive | \ də-ˈri-və-tiv How to pronounce derivative (audio) \

Legal Definition of derivative

 (Entry 1 of 2)

: a contract or security that derives its value from that of an underlying asset (as another security) or from the value of a rate (as of interest or currency exchange) or index of asset value (as a stock index)

Note: Derivatives often take the form of customized contracts transacted outside of security exchanges, while other contracts, such as standard index options and futures, are openly traded on such exchanges. Derivatives often involve a forward contract.

derivative

adjective

Legal Definition of derivative (Entry 2 of 2)

1 : arising out of or dependent on the existence of something else — compare direct
2 : of, relating to, or being a derivative a derivative transaction

Other Words from derivative

derivatively adverb

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Comments on derivative

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