An example of a derivative security is ______.
A)a common share of Microsoft
B)a call option on Intel stock
C)a commodity futures contract
D)B and C
E)A and B

Question

Quizplus · Accepted Answer

A derivative security is a financial instrument whose value is derived from an underlying asset or group of assets. Both a call option on Intel stock and a commodity futures contract fit this definition, making D the correct answer. A common share of Microsoft is not a derivative security as its value is not dependent on any other asset or group of assets.

An Example of a Derivative Security Is ______