CCM Derivatives Practice Questions - SEC Sri Lanka Certificate In Derivative Securities (CCM) Exam

What is the primary distinguishing characteristic of a derivative security compared to an equity share or bond?

Its value is derived from the price of another underlying asset. It represents direct ownership or equity in the issuing corporation. It provides a legal claim on the physical assets of the issuer in liquidation. It guarantees a fixed periodic interest payment to the investor.

Correct Answer:

Its value is derived from the price of another underlying asset.

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