A Derivative Security Is a fiNancial Asset That

question 27

Multiple Choice

A derivative security is a financial asset that:

• A) Reduces a firm's exposure to price fluctuations.
• B) Derives its value from the government guarantee underlying the security.
• C) Is valued based on its claim on another financial asset.
• D) Is issued only by firms involved in the banking industry.
• E) Has a value which moves inversely to the underlying asset.

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