Which of These Formalizes an Agreement Between Two Parties to Exchange

question 71

Multiple Choice

Which of these formalizes an agreement between two parties to exchange a standard quantity of an asset at a predetermined price on a specified date in the future?

• A) derivative security
• B) initial public offering
• C) liquidity asset
• D) trading volume

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Definitions:

FASB

Financial Accounting Standards Board, an independent organization responsible for establishing and improving financial accounting and reporting standards in the United States.

Fair Value

This is the estimated price at which an asset or liability could be traded in an orderly transaction between market participants at the measurement date.

Net Income

The total profit of a company after all expenses, including taxes and operating costs, have been subtracted from total revenue.

Derivative

A financial instrument whose value is based on the performance of underlying assets such as stocks, bonds, or commodities.