Definition
Derivative security is the financial instrument whose value is based on the price of another security. Founders reach for it when a vague conversation needs a shared, specific meaning. Name it clearly, then let the next decision — a hire, a price, a test, or a pass — follow from that meaning.
In the room
How the word shows up in a real conversation.
A mentor asks, “What is your Derivative security?” The useful answer is concrete: financial instrument whose value is based on the price of another security. A slide title is not an answer.
Common mistake
Using Derivative security as a label instead of a fact. If you cannot point to the evidence — a number, a customer, or a written assumption — you are using the word as jargon.
See also
Derivative
Financial instrument whose value is derived from an underlying asset or benchmark.
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Derivative contract
Agreement between parties whose value depends on an underlying financial instrument.
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Descending price auction
Auction format where the price starts high and decreases until a bidder accepts.
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Design for Assembly (DFA)
Engineering approach focused on simplifying product assembly processes.
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