Economics · Financial Derivatives
Which of the following statements about the underlying asset in a derivative contract is correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The underlying asset does not affect the value of the derivative contract, as derivatives are independent of market assets.
- 2The value of the derivative is derived from the change in the value of a specific underlying asset, which could range from commodities to financial instruments.✓
- 3The underlying asset for derivatives is always a financial instrument such as stocks or bonds.
- 4The value of a derivative changes based on the performance of a physical asset only.
Correct answer
The value of the derivative is derived from the change in the value of a specific underlying asset, which could range from commodities to financial instruments.
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