Financial Instrument Whose Return Is Derived from the Return on Another

question 216

Multiple Choice

Financial instrument whose return is derived from the return on another instrument is known as a (n) :

• A) Derivative security
• B) Fixed income security
• C) Equity security
• D) Money market security

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Definitions:

Principal

The original amount of money invested or loaned, not including profits or interest.

Agent's Unauthorized Contract

A contract or agreement made by an agent without the proper authority or permission from the principal, often raising questions of enforceability and liability.

Third Party

An entity that is involved in a transaction or situation but is not one of the two main entities directly involved, often providing an external perspective or service.

Withdrawal

The act of removing funds from a bank account, or retracting from participation in an agreement, situation, or engagement.