Which of the following is NOT considered an underlying asset for derivatives? A) Currencies B) Real estate C) Equities D) Commodities

Understand the Problem

The question is asking to identify which option is not classified as an underlying asset for derivatives. This involves understanding the different types of underlying assets in the context of derivative financial instruments.

More Information

Real estate is generally not considered a typical underlying asset for derivatives compared to currencies, equities, and commodities. While it can occasionally serve as an underlying asset, it is not as common as the other options.

Tips

A common mistake is assuming that any tangible asset can serve as an underlying asset for derivatives. It's important to recognize that derivatives typically pivot around highly liquid and market-traded assets.

Sources

• What Is Underlying? Definition, Meaning, Pros, Cons, and Example - investopedia.com