The Definition of a Derivative Requires Which of the Following

question 15

Multiple Choice

The definition of a derivative requires which of the following characteristics to be met?
I Its value changes in response to a change in an underlying variable such as a specified interest rate,price or foreign exchange rate.
II It must be settled on a net basis.
III It requires no initial net investment or it is smaller than for other types of contracts expected to have a similar response to changes in market factors.
IV It is to be settled at a future date.

• A)I,II and III
• B)I,II and IV
• C)I,III and IV
• D)II,III and IV

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Definitions:

Formal Operational Thinking

The stage in cognitive development (typically occurring from age 12 onwards) where individuals develop the ability to think abstractly, logically, and systematically.

Combination-of-Liquids Task

A task used in developmental psychology to assess a child's understanding of conservation concepts, involving the mixing of different volumes or colors of liquids.

Formal Operational

The stage in Piaget's theory of cognitive development where individuals develop the ability to think abstractly, reason logically, and understand hypothetical situations.

Preoperational

A stage in Piaget's theory of cognitive development, occurring from approximately 2 to 7 years of age, characterized by symbolic thought but not yet capable of logical operations.