The value of a derivative is determined by:
A)The Federal Reserve.
B)SEC regulation.
C)The value of the underlying asset.
D)The risk-free rate.

Question

Quizplus · Accepted Answer

The value of a derivative is primarily determined by the underlying asset, such as a stock or commodity, and how it performs in the market. Other factors, such as interest rates and volatility, can also impact the value of derivatives, but the underlying asset is the biggest determinant. The Federal Reserve and SEC regulation may affect the overall market, but they do not directly influence the value of a specific derivative. The risk-free rate is a factor in determining the price of derivatives, but it is not the primary determinant.

The Value of a Derivative Is Determined By