n NISM Certifications
VII NISM Series VII
Medium

The value of a derivative is derived from ______.

Practice question from NISM Series VII Mock Test 5 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Only the underlying index

  2. B

    Only the underlying reference rate

  3. C

    Only the underlying asset

  4. All of the above

    Correct answer

Why this is the answer

A derivative’s value depends on underlying variables such as assets, indices, or reference rates. Derivatives include forwards, futures, options, and swaps.

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NISM Series VII Mock Test 5