The type of financial security having payoffs which are connected to some securities issued some time back, is classified as ____________?
Correct answer: D. derivative security
- A. linked security
- B. previous security
- C. payoff security
- D. derivative security
Explanation
A derivative security derives its value or payoff from an underlying security, asset or financial variable. A linked security is not the standard general term for this category.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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