Question

What is a basic feature of derivatives?

a.

It remains unaffected by changes in the underlying price or index.

b.

Its value changes in response to changes in the underlying price or index.

c.

It requires a significant initial investment.

d.

Settlement is always done immediately.

Posted under IC 89 Management Accounting

Answer: (b).Its value changes in response to changes in the underlying price or index. Explanation:A key feature of derivatives is that their value changes in response to changes in the underlying price or index.

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Q. What is a basic feature of derivatives?
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