Which of the following is a derivative security?
A)Convertible debt
B)A forward exchange contract
C)A hire purchase contract
D)None of the above

Question

Quizplus · Accepted Answer

A forward exchange contract is a derivative security because it derives its value from an underlying asset, in this case, the exchange rate between two currencies. Convertible debt and hire purchase contract are not derivative securities because they do not derive their value from an underlying asset.

Which of the Following Is a Derivative Security