Because puts and calls derive their value from the behavior of some other real or financial asset, they are known as derivative securities. This statement is true.
A financial contract type whose value is based on an underlying value, group of assets, or benchmark is referred to as a "derivative." A financial instrument whose value is based on the value of another asset is referred to as a derivative security. Futures, forwards, options, and swaps are the four primary categories of derivatives.
A convertible bond is an illustration of a derivative security. Such a bond may be exchanged into a predetermined number of shares of the issuing company's stock at the discretion of the bondholder. A convertible bond is a derivative investment since its value is based on the price of the underlying stock.
The correct answer is option a.
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