n NISM Certifications
XV NISM Series XV
Medium

Which of the following instruments is considered a derivative?

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

Options

  1. A

    Equity shares

  2. B

    Corporate bonds

  3. Stock options

    Correct answer

  4. D

    Government securities

Why this is the answer

Derivatives derive their value from an underlying asset, such as stock, bond, or commodity. Stock options give the right to buy/sell shares at a predetermined price, making them derivatives. Equity shares and bonds are direct investments, while government securities are debt instruments.

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