Final answer:
Cash is not a derivative because it does not derive its value from another asset, unlike interest rate swaps, stock options, and forward contracts. A rise in the supply of money in the financial market generally leads to a decline in interest rates, according to the principles of supply and demand.
Step-by-step explanation:
The financial instrument that is not an example of a derivative is b. cash. Derivatives are complex financial contracts that derive their value from an underlying asset or index, such as stocks, bonds, commodities, currencies, interest rates, or market indexes. Interest rate swaps, stock options, and forward contracts are all examples of derivatives because their value depends on the value of other assets. Cash, on the other hand, is a liquid asset and does not derive its value from another asset, making it not a derivative.
As for the changes in the financial market that would lead to a decline in interest rates, the answer would be c. a rise in supply. The basic law of supply and demand dictates that when the supply of money increases in the financial market without a corresponding increase in demand, the price of borrowing money, which is the interest rate, will typically decline. On the other hand, a rise in demand for money with a constant supply would likely increase interest rates due to the increased competition for the available funds.