The best definition of derivative securities is:
A) An insurance policy that ensures underlying assets are secured.
B) Investment products whose value derives from the price of another, underlying, asset.
C) Financial markets where long-term debt and equity securities are bought and sold.
D) Creation of new securities or financial processes.
E) A compensation package for managers that ties their salary to the firm's share price.

Question

Quizplus · Accepted Answer

Derivative securities are financial instruments whose value is dependent on the price movements of another, underlying asset. This includes options, futures, and swaps, where their value is derived from assets like stocks, bonds, commodities, currencies, interest rates, and market indexes.

The Best Definition of Derivative Securities Is