Which of the Following Securities Is Not a Derivative

question 5

Multiple Choice

Which of the following securities is not a derivative?

• A) Call option on a stock.
• B) A bond issued by a BBB-rated corporate firm.
• C) Put option on a currency.
• D) A futures contract on oil.

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Definitions:

Inventory

The total amount of goods and materials held by a company intended for sale or production.

Gain on Bargain Purchase

The financial benefit that occurs when a company acquires another entity for a price below the fair value of its net assets.

Pre-acquisition Entries

Journal entries made to account for the assets and liabilities of a company before it is acquired by another entity.

Bonus Share Dividend

A reward to shareholders in the form of additional shares instead of cash, based on the number of shares already held, often issued from a company's accumulated reserves.