With example, differentiate between a physical settlement and a cash settlement in the derivatives market.

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

A: Swap transactions are derivatives transactions

Q: Explain accounting for derivatives.

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

Q: The derivatives market allows for

A: Derivatives refer to the contract among various parties whose value depends on a set of assets or a…

Q: Define speculation in derivatives

A: Individuals and Firms often trade in the derivatives market when they want to enter a trade on a…

Q: What is Internal Rate of Return - All Cash Deal?  Please provide examples

A: Internal Rate of Return (IRR)IRR is the annualized effective compounded rate or return that can be…

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: Why the financial instruments do often called derivatives?

A:

Q: What is derivatives market? Cite an example.

A: Before knowing the derivative market, let us know about the derivatives :  The instruments which…

Q: In hedging, interest rate swap (IRS) can be used to hedge against rising rates, falling rates,…

A: to understand the topic better, the interest rate swap is defined as the contract between any two or…

Q: Describe disclosure requirements for derivatives and risk.

A: As per FAS 161- Please see below : Disclosures to be made in the footnotes for derivatives- An…

Q: For accounting purposes, what type of hedge is the forward contract? a. A cash flow hedge b. A…

A: A forward contract is a contract between the two parties in which both parties agrees to exchange…

Q: Give the complete distinguishing features of a money market instrument. Explain.

A: Money market instrument : Money market instrument are those financial securities that have maturity…

Q: Under which circumstances can the speculator gain a profit and what is the risk of carry trades?

A: The big risk in a carry trade is the uncertainty of exchange rates. Using the example above, if the…

Q: at is the difference among regular market, negotiated market, and cash market? please elaborate

A: Introduction : After an IPO, a corporation 's stocks are released on the secondary market, which is…

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: Differentiate between the following types of markets: physical asset vs. financial markets, spot vs.…

A: Note : As per the guidelines, only first three parts will be answered.

Q: Recommend how MR D.I.Y. Group (M) Berhad could manage the interest rate risk and foreign exchange…

A: Introduction  Derivatives are financial instrument that have values derived from other assets like…

Q: How are derivatives recorded?

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

Q: Trading in derivatives

A: Derivatives are the type of contracts that force the value of an underlying asset. These contracts…

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 do we mean by covered interest arbitrage parity? Explain in detail by a diagram.

A: Covered interest arbitrage: It is relationship between forward premium and interest rates. If…

Q: What apparatus exists to facilitate purchases and sales of futures contracts?

A: The question is based on the concept of trading in future contract in derivative segment of stock…

Q: Please define the “Interest Rate Parity Theorem” and explain the equation which describes it.

A: An interest rate parity theory is defined as an interest rate differential, which is between the two…

Q: What are Various Types of Derivative Instruments? How Derivative Instruments work in Financial…

A: Derivative is a type of financial instrument that derives its value from the underlying asset. The…

Q: How are derivatives reported on the balance sheet? Why?

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

Q: How should derivatives be used in risk management? What problems can occur?

A: Derivatives are financial instruments that have values derived from other assets like stocks, bonds,…

Q: What is an efficient market and why is it important for derivatives markets?

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

Q: A credit derivative allows creditors and debtors to _________ their exposure to credit risk. For…

A: A credit derivative is a financial contract that allows the parties to minimize their exposure to…

Q: Using an example, explain how an interest swap works.

A: Solution- Statement-Interest swaps work  Swap-  Swap may be a forward contract painted by a…