_____________are agreements to buy, sell, effect cash settlement or otherwise exchange securities based on the performance, market price, interest rate, currency price, etc. of an underlying interest.

Question

Options

• AProductive measures
• BOffshoots
• CDerivatives
• DNone of eth above

• A
  15% (5)
• B
  3% (1)
• C
  76% (25)
• D
  6% (2)

Explanation

Derivatives (C) are financial contracts whose value is derived from an underlying interest - such as a security's market price, interest rate, or currency price. Common examples include futures, options, swaps, and forward contracts, all of which are agreements to buy, sell, or exchange value based on something else's performance.

Option A (Productive measures) is not a recognized financial term and has no defined meaning in securities law or finance. Option B (Offshoots) is informal language that doesn't correspond to any legal or financial classification of instruments. Option D (None of the above) is wrong because C is clearly correct.

Memory tip: Think of the word root - a derivative is something that comes from ("derives from") something else. Just as a math derivative measures change relative to another variable, a financial derivative's value changes relative to its underlying asset.

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