Which of the following describes a derivative?

A derivative is a financial instrument whose value is derived from the price of another asset, such as stocks, bonds, commodities, or indices. This means that the value and payoff of a derivative are dependent on the performance of the underlying asset. Common examples of derivatives include options and futures contracts, which gain their worth from fluctuations in the underlying asset's price.

Understanding this concept is fundamental in finance, especially in risk management and hedging strategies, where investors use derivatives to protect against price changes in the underlying assets or to speculate on their future movements. The other options do not accurately capture the essence of what a derivative is, as they suggest fixed values, guaranteed payouts, or an investment category, none of which reflect the core characteristic that defines derivatives.