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A derivatives product is... what exactly?

This final note today -- on the theory that news of business and the economy can be dense, an explainer.

Interviewer: So what exactly is a derivatives product?

Trader: Derivative products are a lot about leverage.

Interviewer: Got it. So what is leverage exactly?

Trader: A lot of leverage is about maximizing your margins.

Interviewer: OK, so how would you define "margins?"

Trader: Yeah, margins really come into play when talking about derivatives.

Interviewer: OK, so what is a derivatives product?

Trader: They're kind of like stocks.

Interviewer: For our listeners who aren't well versed in finance, what are stocks?

Trader: They fluctuate. Stocks definitely fluctuate.

Interviewer: What does that mean exactly?

Trader: It means that the market is cyclical.

Interviewer: And by "the market" you mean...

Trader: Buy low, sell high.

Interviewer: I'm sorry, what?

Trader: Supply and demand.

Interviewer: Excuse me?

Trader: Nature versus nurture.

Interviewer: Nature versus...

Trader: Mi casa es su casa.

Interviewer: What?

Trader: Mi casa... es... su casa.

Interviewer: You don't even know what derivatives are, do you?


Maybe. Maybe not. Our skit was written by Insanitas Comedy. Michelle Philippe and Jonathan Karp brought it to life.

About the author

Kai Ryssdal is the host and senior editor of Marketplace, public radio’s program on business and the economy.

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