Derivatives Are Securities Such as Options, and Forward and Futures

question 44

True/False

Derivatives are securities such as options, and forward and futures contracts, whose value depends on the performance of an underlying security.

---

Definitions:

Trading Securities Portfolio

A collection of securities bought and held primarily for sale in the short term to generate income on short-term price differences.

Fair Value

The estimated price at which an asset can be bought or sold in an orderly transaction between market participants at the valuation date.

Unrealized Gain

An increase in the value of an asset that has not been sold, thus not yet generating actual profit.

Readily Marketable

Items or securities that are readily marketable can be quickly sold in the market without significantly affecting their price.