A. linked security
B. previous security
C. payoff security
D. derivative security
✅ The correct answer is option D.
Type of financial security having payoffs which are connected to some securities issued some time back is classified as derivative security. A derivative security is a financial instrument whose value depends upon the value of another asset. The main types of derivatives are futures, forwards, options, and swaps. An example of a derivative security is a convertible bond.
Type of financial security having payoffs which are connected to some securities issued some time back is classified as derivative security. A derivative security is a financial instrument whose value depends upon the value of another asset. The main types of derivatives are futures, forwards, options, and swaps. An example of a derivative security is a convertible bond.