Why Are Options Referred to as Derivative Instruments

question 59

Essay

Why are options referred to as derivative instruments?

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Definitions:

Supply-Side Economics

An economic theory that suggests economic growth can be most effectively created by lowering taxes and decreasing regulation, to increase production.

Increasing Productive Capacity

The process or actions taken to enhance the capability of a company or economy to produce goods and services.

Monetary Policy

The process by which a central bank controls the money supply in the economy, usually with the goal of controlling inflation, interest rates, and stimulating economic growth.

Fiscal Policy

Fiscal policy involves government adjustments to its spending levels and tax rates to monitor and influence a nation's economy.