Question

What is the definition of a derivative?

a.

A financial instrument with intrinsic value

b.

A security derived from tangible assets only

c.

A contract with no intrinsic value itself, deriving its value from an underlying entity

d.

A security without any connection to underlying assets

Posted under IC 89 Management Accounting

Answer: (c).A contract with no intrinsic value itself, deriving its value from an underlying entity Explanation:A derivative is a financial instrument or security that derives its value from the performance of underlying entities, such as assets, interest rates, currency exchange rates, or indexes.

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Q. What is the definition of a derivative?
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