A derivative is a financial instrument whose value is determined by
A) a regulatory body such as the SEC.
B) an underlying security.
C) futures and options.
D) None of these options are correct.

Question

Quizplus · Accepted Answer

A derivative's value is derived from the underlying security, such as a stock, bond, or commodity. The value of the derivative fluctuates based on the performance of the underlying security. The other options may be related to derivatives, but they do not define what a derivative is or how its value is determined.

A Derivative Is a Financial Instrument Whose Value Is Determined