1.   Futures and options are known as derivative assets because they are based on other underlying assets which have volatile prices.

2.   It is the volatility of price of the underlying asset which makes it worthwhile to create the derivative asset.

3.   The option premium fluctuates over time as a function of the price of the underlying asset, its volatility and the rate of interest.

4.   When the current spot price of the underlying asset exceeds the exercise price of a call option, the option is said to be in the money.

5.   However, there are some instances where a change of control can affect the underlying assets.

6.   A poor performer like Tri-Continental tends to sell at a discount to the value of its underlying assets.

7.   A warrant is a financial instrument that gives its owner the right at a future time to buy an underlying asset at a predetermined price.

8.   Broadly speaking, derivatives are financial contracts whose value is derived from the value of an underlying financial asset or index.

9.   But ownership of a tracking stock does not represent ownership of the underlying assets, as common stock does.

10.   CapMAC specializes in insurance for some of these bonds, guaranteeing that investors get paid, even if underlying assets go bad and issuers fail to service their obligations.