Investment Products or Instruments That Derive Their Value from Underlying

question 4

Multiple Choice

Investment products or instruments that derive their value from underlying assets include:

• A) contracts for difference (CFDs)
• B) options
• C) warrants
• D) all of the above

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Definitions:

Devaluation

A deliberate downward adjustment to the value of a country's currency relative to another currency, group of currencies, or standard.

Fixed Exchange Rate

A system where the value of a currency is pegged at a set value against another currency or a basket of currencies.

Floating Exchange Rate

A currency's value that is determined by the foreign exchange market depending on supply and demand relative to other currencies, rather than a fixed value set by a government.

Purchasing Power Parity

An economic theory that compares different countries' currencies through a "basket of goods" approach, aiming to determine the adjustments needed to make the exchange rates of two currencies equal.