Financial Instruments Whose Payoffs Are Linked to Previously Issued Securities

question 44

Multiple Choice

Financial instruments whose payoffs are linked to previously issued securities are called

• A)grandfathered bonds.
• B)financial derivatives.
• C)hedge securities.
• D)reversible bonds.

---

Definitions:

Consumer Surplus

The variance between the total sum consumers are ready and capable of paying for a product or service versus what they genuinely spend.

New Buyers

Refers to individuals or entities entering the market as consumers for the first time, contributing to increased demand.

Market Entry

The strategy or process by which a company enters a new market or industry, which can include establishing new operations or acquiring an existing business.

Total Surplus

The sum of consumer surplus and producer surplus in a market, representing the total benefits to society from trade.