Derivatives overview - orange juice analogy
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Vocabulary flashcards based on the orange juice analogy used to explain derivatives.
Last updated 8:50 PM on 9/17/25
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4 Terms
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Derivative
A financial instrument whose value is derived from the price of another asset (the underlying).
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Underlying asset
The asset from which a derivative's value is derived; in the analogy, the price of orange juice.
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Financial derivative
A contract whose payoff depends on the price of an underlying asset; conceptually similar to the orange juice analogy.
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Orange juice price analogy
An analogy showing how derivatives mirror movements in the price of a commodity, illustrating how the underlying price drives derivative value.
Flashcards (40)