Which type of financial derivative is used to protect against adverse price movements in an asset? A) Call option B) Put option C) Futures contract D) Swap contract

Q: A call option holder has an obligation to sell the asset. True or false?

A: A call option is an instrument which provides its holder an option to buy an underlying asset on a…

Q: What is a FUTURES CONTRACT and what are its key components

A: Derivatives are those securities, the value of which depends on another security. There are few…

Q: Describe about different types of investment derivatives.

A: Derivatives: Derivatives are some financial instruments which are meant for managing risk and…

Q: An inflation hedge is an asset that increases in value at a rate equal to or greater than the rate…

A: Hedging is technique of reducing risk. This reduction in risk also results typically in a decrease…

Q: What are the Derivative Securities? Elaborate in detail the different types and transactions of…

A: Derivative Contracts are used by parties to earn profit by executing a transaction at a favorable…

Q: What are the main differences between options and warrant contracts and forward and futures…

A: The difference among options and warrant contract:

Q: Define the terms, or give short explanations.               -short sale/short selling…

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

Q: What is the difference between forward and futures contracts, focusing on the pros and cons of each

A: In certain ways future and forward deals are similar: both include the buying and selling of assets…

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: Hedgers can enter into an insurance policy, also known as a financia contract, also known as a…

A: There are mainly three types of derivative contracts. They are – futures, options and swaps.

Q: Describe the accounting for the fair value option.

A: The fair value option allows the business to record its assets and liabilities at their fair value.…

Q: The seller of a put option is not necessarily the seller of the underlying asset. True False

A: The options can be sold even though the underlying assets are not held by the option sellers.

Q: Describe the uses of and accounting for derivatives

A: Accounting for derivatives: It is a method of recording a derivative holding of a company’s balance…

Q: The seller of a put option is not necessarily the seller of the underlying asset. Select one: O True…

A: Put options are vital financial derivatives which provide the right to sell the asset at the…

Q: Explain the main differences between futures contracts and forward contracts.

A: Solution- Future Contract-        A derivative may be a legal agreement to shop for or sell a…

Q: a)explain current credit risk and potential credit risk.       b)describe the primary methods of…

A: The answers to the above question are given below :

Q: The group of derivatives with contracts written on which of the following types of underlying assets…

A: Derivatives are used to mitigate the risk of price fluctuation of the underlying asset. The types of…

Q: what is the Difference between derivatives and insurance contract

A: Derivatives and insurance contracts are both financial instruments used for managing risk, but they…

Q: Debentures are frequently issued at amounts greater or less than face value. Discuss how the market…

A: The market rate of interest is the rate of interest that is currently being offered in the market…

Q: Which of the following may be measured subsequently at amortized cost? Group of answer choices A…

A: Amortized cost  Amortized cost is referred to as accumulated portion of the cost recorded of fixed…

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: How do putable and callable bonds trade relative to a similar security without an embedded option?…

A: A callable bond is a type of bond which can be redeemed before the maturity date by the issuer at…

Q: Discuss the use of derivatives and its implications to investors

A: Derivatives: Derivatives are those financial instruments which derive their value from an underlying…

Q: derivative is a financial instrument whose value is determined by _____________________.  (Select…

A: A derivative is a financial instrument, the value of which is determined by the performance of the…

Q: What is a futures contract? What are the key differences between forward andfutures contracts?

A: Futures Contract are the Promises made between two parties on the platform called exchange for the…

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: Explain what is meant by “initial margin” on a futures contract

A: A futures contract is a type of common financial agreement that specifies a future date and price at…

Q: One can use Black-Scholes model to price any financial derivatives. true or false

A: The Black-Scholes model was specifically designed to value European-style options on non-dividend…

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: Describe forwards, futures, and swaps.  What are the features of each type of derivative and how are…

A: A forward contract may be a personalized contract between 2 parties purchasing or offering an asset…

Q: What is a futures contract?

A: Derivatives: Derivatives are some financial instruments which are meant for managing risk and…

Q: Discuss the difference between forward and futures contracts, focusing on the pros and cons of each.

A: Hedge:   An investment strategy that is formed to reduce the risk of the adverse price movement of…

Q: Fundamental security underlying the valuation need to be priced correctly for the derivative…

A: Introduction : Derivatives refers to the contractual financial obligations the value of which is…

Q: Derivative

A: Fair Value hedge Vs. Cash Flow hedge     A hedge is a financial instrument that mitigates risk.…

Q: Why might a company become involved in an interestrate swap contract to receive fixed interest…

A: Interest rate swap contract: It is an agreement between the two parties who are in contract, where…

Q: How does a futures contract differ from a forward contract?

A: Derivatives: A derivative is defined as a financial instrument whose value is derived from the value…

Q: What are derivative instruments? Give examples of derivatives and briefly describe them. What are…

A: Subordinates are protections that get their worth from a hidden resource or benchmark. Normal…

Q: In a conventional interest rate swap agreement,the fixed-rate payer is attempting to transform the…

A: An interest rate swap is a financial contract between two parties, typically corporations or…

Q: What are advantages and disadvantages of using derivatives? Discuss. Provide examples.

A: “Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only…

Q: A derivative security derives its value from another previously issued instrument (a stock or bond).…

A: Derivatives can be used to for hedging or arbitrage purpose.

Q: The value of a derivative does not depend on the value of its underlying asset. True or False

A: False.The value of a derivative is directly influenced by the value and behavior of its underlying…

Q: How will you relate and apply the derivatives instrument to an insurance policy?

A: Derivatives instruments are financial contracts whose value is derived from underlying assets, such…

Q: A security that is neither debt nor equity but derives its value from an underlying asset that is…

A: Convertible securities are securities that can be converted into fixed number of shares after a…