Which of the following is considered to be a derivative?
A) Bonds
B) Mutual funds
C) Swaps
D) Equities

Question

Quizplus · Accepted Answer

Swaps are considered derivatives because they derive their value from the performance of underlying assets, such as interest rates, currency exchange rates, or commodity prices. Unlike bonds, mutual funds, and equities, which represent direct investments in financial instruments or pooled investment vehicles, swaps are contracts that exchange cash flows between two parties based on agreed-upon conditions.

Which of the Following Is Considered to Be a Derivative