Derivatives Are the Financial Instruments That Are

question 9

Multiple Choice

Derivatives are the financial instruments that are:

• A) financial assets, such as shares and bonds that derive their value from the value of the company that issues them.
• B) financial assets whose rates of return must be derived from information published in financial pages.
• C) financial assets that derive their value from underlying assets.
• D) derived by investment banks, which then trade them.

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Definitions:

Production Possibilities Schedule

A table that shows the different combinations of two goods that can be produced with fixed resources and technology.

Tanks

Armored combat vehicles with heavy firepower and strong defensive capabilities, primarily used by military forces in ground warfare.

Opportunity Cost

The cost of foregone alternatives, or what is given up in order to pursue a certain action or decision.

Budget

An estimate of income and expenditure for a set period, often used by governments, businesses, and individuals to plan financial operations.