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In the futures markets, the price of a derivative contract for gold is based on: prices...

In the futures markets, the price of a derivative contract for gold is based on:

prices of gold mining companies.

price of the underlying gold

price of gold in the forward markets.

price of gold commodity indexes.

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Answer #1

A derivative is a contract between two parties whose value is based on an agreed upon underlying asset. For example, if it is a derivative contract for crude oil, then the price of the derivative contract for crude oil would be based upon the price of the crude oil.
Hence, in the futrures markets, the price of a derivative contract for gold is based on the price of the underlying gold.

Correct option is (b)

The price of a derivative contract for gold has no concern with the prices of gold mining companies, price of gold in the forward markets and the price of gold commodity indexes.

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