A financial asset that represents a claim on another financial asset is called a(n) ____________.

A) initial public offering
B) derivative security
C) seasoned equity offering
D) Eurobond
E) subjugated (or junior) stock

Derivative Security

A derivative security is a financial instrument whose value is based on the performance of underlying assets, indexes, or other financial instruments.

Financial Asset

A financial asset refers to any asset that is cash, a contractual right to receive cash or another financial asset from another entity, or a contractual right to exchange financial instruments with another entity under conditions that are potentially favorable.

Claim

A demand for something as due, often referring to a right to payment or other benefits.