Q184
The value of a derivative security _______.
A.
depends on the value of the related primitive security
AnswerB.
can only cause increased risk
C.
is unrelated to the value of the related primitive security
D.
is worthless today
Answer: Option A
Solution
Answer: Option A
Solution:
The value of a derivative security depends on the value of the related primitive security. A derivative security is a financial instrument whose value depends upon the value of another asset. The main types of derivatives are futures, forwards, options, and swaps.