The definition of a derivative requires which of the following characteristics to be met?
I its value must change in response to a change in an underlying variable such as a specified interest rate, price or foreign exchange rate.
II it must be settled on a net basis
III it must require no initial net investment or an additional net investment that is smaller than would be required for other types of contracts with similar responses to changes in market factors.
IV it is to be settled at a future date
A) I, II and III
B) I, III and IV
C) I, II and IV
D) II, III and IV

Question

The definition of a derivative requires which of the following characteristics to be met?
 I its value must change in response to a change in an underlying variable such as a specified interest rate, price or foreign exchange rate.
II it must be settled on a net basis
III it must require no initial net investment or an additional net investment that is smaller than would be required for other types of contracts with similar responses to changes in market factors.
IV it is to be settled at a future date
A) I, II and III
B) I, III and IV
C) I, II and IV
D) II, III and IV

Quizplus · Accepted Answer

The definition of a derivative requires which of the following characteristics to be met?
I its value must change in response to a change in an underlying variable such as a specified interest rate, price or foreign exchange rate.
II it must be settled on a net basis
III it must require no initial net investment or an additional net investment that is smaller than would be required for other types of contracts with similar responses to changes in market factors.
IV it is to be settled at a future date

The Definition of a Derivative Requires Which of the Following