business through a U.S. exchange using U. what is a derivative market in finance.S. dollars (USD). Now the investor is exposed to exchange-rate threat while holding that stock. Exchange-rate risk the risk that the value of the euro will increase in relation to the USD. If the worth of the euro rises, any profits the financier realizes upon offering the stock become less important when they are transformed into euros.Derivatives that might be utilized to hedge this type of danger consist of currency futures and currency swaps. A speculator who expects the euro to appreciate compared to the dollar could benefit by using a derivative that rises in value with the euro. When utilizing derivatives to hypothesize on the cost motion of an underlying property, the investor does not require to have a holding or portfolio presence in the underlying possession.