The correct answer is: C. Previously issued securities.
Financial derivatives are securities whose value is derived from the value of one or more underlying assets. The underlying assets can be stocks, bonds, commodities, currencies, or other financial instruments. The payoffs for financial derivatives are linked to the price of the underlying assets. For example, a call option on a stock gives the buyer the right, but not the obligation, to buy the stock at a specified price on or before a specified date. The payoff for the call option is the difference between the market price of the stock on the expiration date and the strike price, if the stock price is above the strike price on the expiration date.
A. Securities that will be issued in the future are not considered underlying assets for financial derivatives.
B. The volatility of interest rates is not considered an underlying asset for financial derivatives.
D. Government regulations specifying allowable rates of return are not considered underlying assets for financial derivatives.