Understanding Derivatives

Here is an e-mail I received which I found to be very interesting and helpful. I hope you find it so also. (Can you tell I’m on an analogy kick lately?)  :o)  [The nature of the business that “Helga” runs is not of my choosing, but appears to be necessary for the analogy to work. I apologize.]

“Helga is the proprietor of a bar. She realizes that virtually all of her customers are unemployed alcoholics and, as such, can no longer afford to patronize her bar. To solve this problem, she comes up with a new marketing plan that allows her customers to