A derivative is a financial instrument with a value derived from a:
A)regulatory body such as the FTC.
B)primitive or underlying asset.
C)specified risk.
D)negotiated contract.
E)probability of occurrence.

Question

Quizplus · Accepted Answer

A derivative is a financial instrument whose value is derived from an underlying asset, such as a stock, bond, commodity, or currency. The value of the derivative is based on the fluctuations in the price of the underlying asset. Examples of derivatives include futures contracts, options, and swaps. The other answer choices do not accurately describe what a derivative is.

A Derivative Is a Financial Instrument with a Value Derived