Which of the Following Is a Financial Derivative That Derives

question 16

Multiple Choice

Which of the following is a financial derivative that derives value from specific insurable losses or from an index of values?

• A)commodity futures contract
• B)credit default swap
• C)catastrophe bond
• D)insurance option

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Definitions:

Cost Formula

An equation or method used to determine the total cost of production or service delivery, incorporating variables such as labor, materials, and overhead.

Relevant Range

The range of activity or volume within which the assumptions about fixed costs, variable costs, and unit costs are valid for operations or financial modeling.

Unit Costs

The expenses a company faces to manufacture, warehouse, and market a single unit of a specific product or service.

Outliers

Data points that lie significantly outside the range of the rest of the data, often indicating a variance from the norm that could warrant further investigation.