age of over-the-counter products such as swaps or forwards contracts, relative to exchange-traded products such as options or futures, is: a. regulation. b. standardisation. c. flexibility. d.

Q: Advantages of currency futures contracts relative to forward contracts include _     a. Higher…

A: A futures contract is a legal contract to purchase or sell an underlying asset or security at a…

Q: 1. SOFR is the only reference rate available for pricing floating rate securities. a. True b. False

A: The SOFR is the benchmark floating rate for the securities involved in interest rate swaps. It has…

Q: Swap transactions are typically heterogeneous in terms of maturities, indexes, used to determine…

A: Swap transactions are derivatives transactions

Q: (i) Discuss the role of the three main categories of participants in derivative markets.…

A: Derivative markets are a part of financial market where the value of a contract is derived from its…

Q: Explain in detail the pricing applications of commodity derivatives.

A: Commodity Derivatives are the financial instruments which are traded on commodity as underlying…

Q: Which of the following is true with Primary Market? Select one: a. None of the options b. Provides…

A: A primary market is a place where securities are created and issued for the first time. It is the…

Q: What are the pros and cons of using options traded in the over-the-counter market and in an exchange…

A: Options can be defined as those contracts which allow an investor to purchase or sell a security on…

Q: describe the major differences between futures and forwards.   b)describe delivery and settlement…

A: A derivative is a financial contract whose value is derived from the underlying asset, which could…

Q: What is meant by the terminology that an option is in-, at-, or out-of-the-money

A: By deducting the strike price from the current value of the underlying securities, one can determine…

Q: Which of the follwoing is true about a swap? a is not traded on an organized exchange and is…

A: A swap is an agreement between two parties to trade cash flow sequences for a fixed length of time.…

Q: Outline and discuss the role of derivatives in risk management with particular reference to the…

A: Financial instruments known as derivatives are those that are generated from other assets like…

Q: What is the primary distinction between exchange-listed and over-the-counter options? Which option…

A: There are various uncertain future factors which can create the risk in coming time, to avoid or…

Q: Commodities of broker-traders are measured at *

A: As per IAS 2 Inventories, this standard has some exceptions. One such exception is commodity…

Q: describe the role of forward markets and futures markets in price discovery.   b)discuss three…

A: A derivative is a financial contract whose value is derived from the underlying asset, which could…

Q: Define alternative trading system (ATS)

A: An alternative trading system (ATS) is not an exchange-regulated, yet a position that suits its…

Q: The purpose of the hedger in futures trading is ()   A. Transfer price risk                  B.…

A: Hedging is a technique in which risks in underlying assets are managed or reduced by adopting…

Q: Fair Value Measurement Concept Question: What does it mean when fair value is paid to transfer a…

A: Fair Value: It is a measurement based on the current market situation. It is not specific to any…

Q: What is meant by a primary market transaction and a secondary market transaction? Give an example

A: Primary market are market where equity or bonds are issued to investors for the first time.So you…

Q: What are the main differences between forward contracts and futures contracts. b) What is meant by…

A: Since you have asked multiple questions, we will solve the first question for you. Please ask…

Q: A primary market is: -the financial market where new security is sold for the first time. -the…

A: Primary market is a type of capital market where securities will be issued for first time. The…

Q: Explain Important Terms Used in the Market for CMOs and Derivative Securities?

A: CMO (Collateralised Mortgage Obligation): The obligation to repayment ensured by the mortgage to be…

Q: Which of the following people represents several insurance companies but owns the policy…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Which is true about Futures contracts? a. is not traded on an organized exchange and is customized…

A: A futures contract is an agreement between two parties to acquire or sell an item at a specific time…

Q: Critically evaluate interest rate swap agreements focusing on their significance and advantages in…

A: The agreements to exchange a number of payments on specified periods for a certain time are called…

Q: hat are broker markets? What are dealer ow do they differ?

A: Introduction: In the trade market, there are several types of the market associated with it. Two of…

Q: The advantage of over-the-counter products such as swaps or forwards contracts,relative to…

A: The question is multiple choice question. Required  Choose the Correct Option.

Q: Which one of the following is true ? A, CFDs are over - the - counter instruments that can be used…

A: CFD stands for Contract for Difference. It is a financial instrument where the differences in the…

Q: Critically explain the role and objectives of the main participants in the derivatives market.…

A: Derivative market is market which include the market for futures or options which are based on the…

Q: Derivatives are obtained to be used as hedging instrument to manage some kind of risk. for…

A: Derivatives are the type of instrument which is used for financial asset, liability or trading…

Q: Open market operations are typically repurchase agreements. What does this tell you about the likely…

A: Open market operations are those done by Central banks, which provide liquidity to a country’s…

Q: Which of the following statements is correct? Select one: O A. Expectations theory combines…

A: The term structure of interest rates represents the relation between the interest rates and bonds…

Q: Which of the following are economic functions of futures markets? Flexibility in pricing products…

A: "Hi, Thanks for the question. Since you asked multiple question, we will answer first question for…

Q: hanging the market risk premium A. Changes neither the y-intercept nor the slope of the security…

A: The market risk premium is the variations among the expected return on a market portfolio and the…

Q: The fact that the clearinghouse is the counterparty to every futures contract issued is important…

A: Risk is the uncertainty or potential loss in an investment decision.

Q: A futures contract a. is not traded on an organized exchange and is customized to meet the needs…

A: Solution: A future contract is a standardize contract that trades on stock exchanges, these…

Q: A swap contract Select one: A. relates to the trading of an asset owned by one company for another…

A: A swap contract is an agreement between two parties to exchange their liabilities with each other…

Q: 1. Explain how liquidity risk can be a problem when there is a maturity mismatch between the long…

A: Liquidity risk is an important factor in investing as it can cause large losses if an investor is…

Q: The bid-ask spread:   a. Includes a transaction cost component to compensate liquidity providers…

A: Bid-ask spread can be explained as the difference between the price at which a trader is willing to…

Swaps

A swap is a derivative contract in which two parties are agreed to exchange their cash flows from two different financial instruments for a defined period. In swap contracts, cash flows from one financial instrument are fixed and cash flow from other financial instruments is variable based on the interest rate, exchange rate, and commodity price. Swap contracts are transacted in an over-the-counter system. Swap contracts are utilized to hedge risk and mitigate loss.