Which statement is correct about derivative instruments?
A)Any contract that entitles the holder to joint interest in an entity after deducting all of its liabilities.
B)A contract whose value changes according to a specified variable, requires little or no initial investment, and is settled at a future date.
C)Any contract that gives rise to a financial asset for one entity and a financial liability or equity instrument for another entity.
D)A contract that gives the holder the residual interest in an entity after deducting all of its liabilities.

Question

Quizplus · Accepted Answer

A derivative instrument is a financial contract whose value is derived from the performance of an underlying asset, index, or interest rate. This contract can be settled at a future date and requires little or no initial investment. Example of derivative instruments include futures, options, and swaps.

Which Statement Is Correct About Derivative Instruments