Which of the following is NOT a type of equity derivative?*1 pointa) Stock optionsb) Stock bondsc) Stock futuresd) Stock swaps

Break Down the Problem

1. Identify the types of equity derivatives listed in the options.
2. Determine which of these options does not qualify as an equity derivative.

Relevant Concepts

Equity derivatives are financial instruments whose value is derived from the price of an underlying equity asset. Common types include:

• Stock options
• Stock futures
• Stock swaps Stock bonds do not fall under the category of equity derivatives as they are typically related to fixed income securities rather than derivatives.

Analysis and Detail

1. Stock options: Contracts giving the right to buy or sell an underlying stock at a predetermined price.
2. Stock futures: Contracts agreeing to buy or sell an underlying stock at a set price at a future date.
3. Stock swaps: Agreements to exchange cash flows related to stock prices.
4. Stock bonds: These are not a derivative but rather a method of raising capital, typically representing debt.

Verify and Summarize

After evaluating each option, it is clear that stock bonds do not share the characteristics of equity derivatives, while the others do.

Final Answer

b) Stock bonds is NOT a type of equity derivative.