A Derivative Is a Financial Instrument Whose Value Is Determined

question 15

Multiple Choice

A derivative is a financial instrument whose value is determined by

• A)a regulatory body such as the FTC.
• B)the value of an underlying asset.
• C)hedging a risk.
• D)speculation.

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Definitions:

Share Capital

The amount of money raised by a company through the issuance of shares to its shareholders.

Corporate Form

A legal structure for organizing a business as a separate entity, recognized by law as having its own rights and liabilities.

Government Regulation

Rules established by authorities designed to control and direct the actions of individuals and organizations within a society.

Stock Dividends Distributable

Shares that have been declared as a dividend but have not yet been distributed to shareholders.