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.

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Definitions:

Money Supply

The sum of all money present in an economy at a given moment, which encompasses cash, coins, and the amounts in checking and savings accounts.

Currency

A system of money in general use in a particular country or in the international market for trade and finance.

Reserve Requirement

The minimum amount of reserves a bank must hold against deposits, as mandated by central banking authorities to ensure banking system stability.

Tight Monetary Policy

A central bank policy aimed at reducing inflation and slowing down the growth in the money supply by raising interest rates and other measures.