Founder Dilution. The amount of ownership given up by startup founders, expressed as a percentage—“the founders are willing to accept a 20% dilution in exchange for a $200,000 angel fund investment.” Investor Dilution. Founders are not the only stakeholders that give up equity as new investors come into the funding picture. Existing investors can also be required to withstand a reduction in their ownership percentage in the startup. If the startup raises multiple rounds of equity investment, early investors will give up some ownership to new investors. Anti-dilution rights attached to preferred shares are one way investors attempt to limit their exposure to dilution. Poland, Stephen R.. Founder’s Pocket Guide: Startup Valuation (Founder’s Pocket Guide Book 1) (p. 15). 1x1 Media. Kindle Edition.

Interest rate derivatives are used in structured fi nance transactions to control interest rate risk with respect to changes in the level of interest rates.

Typically, derivatives are signifi cantly more volatile than the underlying securities on which they are based.

A derivative is an investment that depends on the value of something else.