A derivative security is a:
A) Financial asset that derives its value based solely on values in the futures market.
B) Real asset whose value is based on the market value of a financial asset.
C) Financial asset that represents a claim to another financial asset.
D) Financial asset with a life equal to the life of the underlying asset.
E) Real asset that obligates both the buyer and the seller to complete an exchange on a predetermined date at a predetermined price.

Question

Quizplus · Accepted Answer

A derivative security is essentially a financial instrument whose value is dependent on or derived from, an underlying asset or group of assets—the underlying asset can be stocks, bonds, commodities, currencies, interest rates, or market indexes.

A Derivative Security Is A