An Example of a Derivative Security Is ________

question 58

Multiple Choice

An example of a derivative security is ________.

• A) a common share of General Motors
• B) a call option on Intel stock
• C) a Ford bond
• D) a U.S. Treasury bond

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Definitions:

Accounting Profits

The net earnings of a company as calculated by subtracting total expenses from gross revenue, according to accepted accounting principles.

Economic Profit

The difference between a firm's total revenue and its total costs, including both explicit and implicit costs, reflecting the financial gain exceeding the opportunity cost of resources used.

Accounting Profit

Net income of a company is determined by deducting total expenses from total revenues, in line with established accounting norms.

Implicit Costs

The opportunity costs associated with a company's resources that are not directly paid out in cash but represent foregone alternatives.