Financial derivatives include ________.
A) stocks
B) bonds
C) forward contracts
D) both A and B

Question

Quizplus · Accepted Answer

Financial derivatives are instruments that derive their value from an underlying asset or entities, such as stocks, bonds, commodities, or currencies. Forward contracts are a type of financial derivative that allows two parties to agree on a price for an asset at a future date. While stocks and bonds are not inherently financial derivatives, they can be used to create derivative products like options or futures. Therefore, Choices A and B are not correct as they are not exclusively financial derivatives. Only choice C, forward contracts, is a financial derivative.

Financial Derivatives Include ________