An example of a derivative security is
A) a common share of Microsoft.
B) a call option on Intel stock.
C) a commodity futures contract.
D) a call option on Intel stock and a commodity futures contract.
E) a common share of Microsoft and a call option on Intel stock.

Question

Quizplus · Accepted Answer

Derivative securities are financial instruments whose value is derived from the value of another asset. Both a call option on Intel stock and a commodity futures contract derive their value from the underlying assets (Intel stock and the commodity, respectively), making them examples of derivative securities.

An Example of a Derivative Security Is