Derivative securities are also called contingent claims because
A) their owners may choose whether or not to exercise them.
B) a large contingent of investors holds them.
C) the writers may choose whether or not to exercise them.
D) their payoffs depend on the prices of other assets.
E) contingency management is used in adding them to portfolios.

Question

Quizplus · Accepted Answer

Derivative securities are termed contingent claims because their payoffs are contingent upon or depend on the prices of other assets, such as stocks, bonds, commodities, or market indices.

Derivative Securities Are Also Called Contingent Claims Because