Financial derivatives are contracts or instruments derived from, and based on, underlying assets such as stocks, bonds, currency, commodities or indices. The value of the derivative is determined by the underlying asset which can be stocks, bonds, commodities, interest rates, and currencies. Derivatives are used to manage financial risk and are commonly used by investors, traders, speculators, and banks. The most common types of derivatives are futures, options, swaps, and forwards. Derivatives are designed to go along with and assist with the management of financial risk, such as interest rate risk, currency risk, and legal risk.