A financial instrument on which a futures contract is based is called which one of the following?
A)hedged security
B)short position
C)long position
D)speculative asset
E)underlying asset

Question

Quizplus · Accepted Answer

The underlying asset is the financial instrument (such as a commodity, stock, or currency) on which a futures contract is based. It is the asset that the buyer of the futures contract has the right to buy, and the seller has the obligation to sell, at a predetermined price and date.

A Financial Instrument on Which a Futures Contract Is Based