Which of the Following Best Describes a Derivative Contract

question 21

Multiple Choice

Which of the following best describes a derivative contract?

• A)Contractual commitments to make a loan up to a stated amount at a given interest rate in the future.
• B)Contingent guarantees sold by an FI to underwrite the performance of the buyer of the guaranty.
• C)Agreement between two parties to exchange a standard quantity of an asset at a predetermined price at a specified date in the future.
• D)Trading in securities prior to their actual issue.

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Definitions:

U.S. Companies

Businesses that are incorporated, operate, or have their primary base of operations within the United States.

Dividend-Payout Stock

NO. However, the concept closely resembles dividend-paying stocks, which are shares in a company that return a portion of the company's earnings to shareholders at regular intervals.

Transactions Costs

Expenses incurred during the purchase or sale of goods and services, which may include commissions, fees, and other charges.

Investors

Individuals or entities that allocate capital with the expectation of receiving financial returns.