An asset whose value is based on the value of another asset is called a:
A) derivative.
B) dividend.
C) stock.
D) bond.

Question

Quizplus · Accepted Answer

A derivative is a financial instrument whose value is derived from the value of an underlying asset, such as a stock, commodity, or currency. Examples of derivatives include options, futures, and swaps. Derivatives are used for hedging and speculation purposes, but they can also be used for arbitrage, which involves exploiting price discrepancies between similar assets.

An Asset Whose Value Is Based on the Value of Another