Derivative Securities Are Also Called Contingent Claims Because

question 20

Multiple Choice

Derivative securities are also called contingent claims because

• A) their owners may choose whether or not to exercise them.
• B) a large contingent of investors holds them.
• C) the writers may choose whether or not to exercise them.
• D) their payoffs depend on the prices of other assets.
• E) contingency management is used in adding them to portfolios.

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Definitions:

Depreciation Expense

The systematic allocation of the cost of a tangible asset over its useful life.

Operating Expenses

Costs associated with the day-to-day operations of a business, excluding the cost of goods sold.

Annual Rate Of Return

The percentage of profit or loss on an investment over a one-year period.

Accumulated Depreciation

The total amount of a tangible fixed asset's cost that has been charged to depreciation expense since the asset was acquired.