Which of the following is/are elements of a derivative?
a. A derivative has one or more underlyings. An underlying is an observable variable such as a specified interest rate, or commodity price, or foreign exchange rate.
b. A derivative has one or more notional amounts. A notional amount is a number of currency units, bushels, shares, or other units specified in the contract.
c. A derivative sometimes requires no initial investment.
d. Derivatives typically require, or permit, net settlement, which means that when the counterparties settle the derivative contract, one of the contracting parties pays the other the fair value of the contract.
e. all of the above
E
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