Question

Definition of a derivative financial instrumentA derivative financial instrument is best described as:________.

a. Evidence of an ownership interest in an entity such as shares of common stock.
b. A contract that conveys to a second entity a right to receive cash from a first entity.
c. A contract that conveys to a second entity a right to future collections on accounts receivable from a first entity.
d. A contract that has its settlement value tied to an underlying notional amount.

Answer 1

d a contract that has a settlement value tied into an underlying notional amount.