The Definition of a Derivative Requires Which of the Following

question 17

Multiple Choice

The definition of a derivative requires which of the following characteristics to be met?
I. Its value must change in response to a change in an underlying variable such as a specified interest rate, foreign exchange rate, credit rating or commodity price.
II. It must require no initial net investment or an additional net investment that is smaller than would be required for other types of contracts with similar responses to changes in market factors.
III. It is to be settled at a future date.
IV. It must be settled on a net basis.

• A) I, III and IV.
• B) I, II and III
• C) I, II and IV.
• D) II, III and IV.

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