Real world example for derivatives

In summary, the conversation discusses the use of derivatives in real world applications such as freeway ramps and tides. The individual asks for examples of how to apply derivative formulas to these scenarios. Another participant provides examples of how acceleration and velocity are derivatives of velocity and displacement, respectively.
  • #1
guitarrc6
16
0
hey guys, i failed calc last year and got a bad grade in physics. But i still want to learn about both. My question is about deratives. I have yet to find a real world example and how to apply the formulas to it. I've hurd that the curvature (dunno if that's a word) of on/off freeway ramps use deratives, and that the tides use deratives. Does anyone have an example of how you can apply the derative formulas to any real world thing, and explain how you got your answer? Any comments would be appericiated.

thanks, brian
 
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  • #2
Sure.

Your acceleration is a derivative of your velocity - it the rate of change of your velocity.
Your velocity is a derivative of your displacement - it the rate of change of your displacement.

Those are probably the two simplest examples. :smile:
 

1. What is a real world example of derivatives?

A real world example of derivatives is a farmer using a futures contract to hedge against potential losses in crop prices.

2. How do derivatives work in the stock market?

In the stock market, derivatives can be used as financial instruments to speculate on the future price movements of a stock. This can include options contracts, futures contracts, and swaps.

3. Can you give an example of how derivatives are used for risk management?

One example of using derivatives for risk management is a company purchasing a credit default swap to protect against the risk of a borrower defaulting on a loan.

4. What are the benefits of using derivatives?

Some benefits of using derivatives include the ability to manage risk, provide liquidity, and potentially generate higher returns through leverage. They can also be used for hedging, speculation, and arbitrage.

5. Are there any downsides to using derivatives?

Yes, there are potential downsides to using derivatives, such as the risk of losing money if the market moves against your position, the complexity and potential for losses due to leverage, and the potential for fraud or manipulation. It is important to fully understand the risks and use proper risk management when trading derivatives.

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