Weather Derivative - An instrument used by companies to hedge against the risk of weather-related losses. The investor who sells a weather derivative accepts the risk by charging the buyer a premium. If nothing happens, then the investor makes a profit. However, if the weather turns bad, then the company claims the money.
Weather Derivative : an instrument used by companies to hedge against the risk of weather-related losses. the investor who sells a weather derivative accepts the risk by charging the buyer a premium. if nothing happens, then the investor makes a profit. however, if the weather turns bad, then the company claims the money.