What is Financial instruments whose values vary with the value of an underlying asset?

Financial instruments whose values vary with the value of an underlying asset are known as derivatives. These instruments include options, futures, swaps, and forwards, which derive their value from the performance of an underlying asset such as stocks, bonds, commodities, or currencies. Derivatives are often used for hedging risks or speculating on price movements. Their value fluctuates in response to changes in the underlying asset's price, making them a vital tool in financial markets.