Which Statement Is Correct About Derivative Instruments

question 51

Multiple Choice

Which statement is correct about derivative instruments?

• A)Any contract that entitles the holder to joint interest in an entity after deducting all of its liabilities.
• B)A contract whose value changes according to a specified variable, requires little or no initial investment, and is settled at a future date.
• C)Any contract that gives rise to a financial asset for one entity and a financial liability or equity instrument for another entity.
• D)A contract that gives the holder the residual interest in an entity after deducting all of its liabilities.

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Definitions:

Operating Income

The profit realized from a company's core business operations, excluding deductions of interest and tax.

Projected Sales

Estimated revenue figures based on market analysis and sales patterns, used for business planning and forecasting.

Depreciation

The systematic allocation of the cost of a tangible or physical asset over its useful life, recognizing it as an expense.