If A is the position in the derivative, B is the position in the underlying security, and C is a fixed- interest loan, then a derivative product can be summarised as:
A) A = B - C.
B) A = B × C.
C) A = B + C.
D) A = B/C.

Question

Quizplus · Accepted Answer

A derivative product is a financial instrument that derives its value from an underlying asset, such as a stock, bond, or commodity. The value of the derivative product is determined by the value of the underlying asset, and the relationship between the two is defined by the terms of the derivative contract. In the given question, A is the position in the derivative, B is the position in the underlying security, and C is a fixed-interest loan. The derivative product can be summarized as A = B + C, which means that the value of the derivative product is equal to the value of the underlying security plus the value of the fixed-interest loan.

If a Is the Position in the Derivative, B Is