An instrument that derives its value from another underlying asset is known as a(n):
A) hedge.
B) derivative.
C) basis.
D) backdate agreement.
E) original document.

Question

Quizplus · Accepted Answer

An instrument that derives its value from another underlying asset is known as a derivative. This can include options, futures, swaps, and other financial contracts that are based on the price movements of an underlying asset such as a stock, commodity, currency, or index. Derivatives are used for hedging, speculation, and other purposes in financial markets.

An Instrument That Derives Its Value from Another Underlying Asset