Which of the following is NOT a type of derivative?

Solution

A forward rate agreement is an agreement to lend money on a particular date in the future at a rate that is determined today. It is like a forward contract where the underlying asset is a bond. A forward rate agreement is an agreement to lend money on a particular date in the future at a rate that is determined today. It is like a forward contract where the underlying asset is a bond. Options are one-way contract where one party has the right but not the obligation to trade in a particular asset at a particular price on pre-determined date/dates or in a particular time interval. Interest rate swaps are agreements where one side pays the other a particular interest rate (fixed or floating) and the other side pays the other a different interest rate (fixed or floating).