Final Answer:
Derivative securities are also called contingent claims because their payout depends on the future realization of certain uncertain events or the value of an underlying asset.
Step-by-step explanation:
The term "contingent" refers to the fact that the payoff of the derivative is not guaranteed and is "contingent" upon some future event. This is in contrast to traditional securities like bonds or stocks, which have fixed or predictable payoffs.
For example, the value of a call option depends on whether the underlying asset price rises above the strike price by the expiration date. If it does, the call option has a positive payoff, but if it doesn't, the call option becomes worthless.
Therefore, the term "contingent claim" accurately describes the nature of derivative securities, highlighting their dependence on future uncertainties.