Which of the following does not describe derivatives? A. These financial instruments are often used to speculate. B. Insurance is required when purchasing derivative securities. C. They are assets that derive their economic value from an underlying asset, such as a stock or bond. D. These financial instruments are often used to hedge against risk

Question

Business

Andrew Douglas

16 April, 10:13

Which of the following does not describe derivatives? A. These financial instruments are often used to speculate. B. Insurance is required when purchasing derivative securities. C. They are assets that derive their economic value from an underlying asset, such as a stock or bond. D. These financial instruments are often used to hedge against risk

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Answers (1)

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Roderick Blankenship · Answer 1

B. Insurance is required when purchasing derivative securities

Explanation:

A derivative is a contract that is drives its values to form the underlying entity and can be interest rates and assets and includes the insurance against the price movement such as hedging. Some of the common derivatives are the futures, swaps and the options and forwards.