Which instruments are explicitly given as derivatives in the material?

Which instruments are explicitly given as derivatives in the material?

• A. Futures and options.
• B. Stocks and bonds.
• C. Real estate and commodities.
• D. Cash and cash equivalents.

Answer: (A)

Derivatives are financial contracts whose value comes from another asset, such as a stock, index, commodity, or rate. Futures and options are classic derivative contracts: futures lock in a price for buying or selling at a future date, while options give the holder the right but not the obligation to do so. The other items listed are assets themselves rather than contracts that derive value from something else, so they aren’t described as derivatives in standard material. Cash and cash equivalents are liquid assets, not contracts whose value depends on an underlying; real estate and commodities refer to asset classes rather than derivative instruments. So the ones explicitly given as derivatives are futures and options.

Derivatives are financial contracts whose value comes from another asset, such as a stock, index, commodity, or rate. Futures and options are classic derivative contracts: futures lock in a price for buying or selling at a future date, while options give the holder the right but not the obligation to do so. The other items listed are assets themselves rather than contracts that derive value from something else, so they aren’t described as derivatives in standard material. Cash and cash equivalents are liquid assets, not contracts whose value depends on an underlying; real estate and commodities refer to asset classes rather than derivative instruments. So the ones explicitly given as derivatives are futures and options.