Derivatives Are Financial Instruments Whose Value Is Based Upon Other

question 48

True/False

Derivatives are financial instruments whose value is based upon other financial instruments, stock indexes or interest rates, or interest rate indexes.

---

Definitions:

Marginal Revenue Curve

A graph that shows how marginal revenue varies as the quantity of output changes, typically downward sloping for firms in competitive markets.

Perfect Competitor

A market structure in which numerous small firms compete against each other with identical products, no single firm can influence the market price; all firms are price takers.

Marginal Revenue

Extra income gained by disposing of one additional unit of a good or service.

Marginal Cost

The expense associated with manufacturing an extra single unit of a product or service.