Which among the following is the correct explanation of Non - Linear Derivatives?
1
Non - Linear Derivatives are those derivatives that are time - dependent and whose sensitivity changes with the passage of time or with market movement. The payoff is non - linearly related to the price of the underlying asset.
2
Non - Linear Derivatives are those derivatives that alternatively change its dependence between time and amount. The payoff is non - linearly related to the amount of the underlying asset
3
Non - Linear Derivatives are those derivatives that help a company to know its true financial status. These Derivatives are used in finding true profit of the firm.
4
Non - Linear Derivatives are those derivatives based on which loan more than 200 crore is sanctioned to public - private firm.
5
Non - Linear Derivatives are those derivatives based on which loan less than 200 crore is sanctioned to public - private firm.