B They facilitate the allocation of risk in the market. Which of the following are advantages of derivatives.
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Derivatives allow users to meet the demand for cost-effective protection against risks associated with movement in the prices of the underlying.
. Division A produces the bicycle frame and division B assembles the rest of the bicycle onto the frame. Help control risk d. BDerivatives markets help keep interest rates down.
Makes it easier to exploit any mispricing and increase efficiency. All of the above. Help control risk d.
Another important advantage of derivative is that it provides access to unavailable market and assets to peoples. 9All of the following are benefits of derivatives markets EXCEPT. Make spot prices stay closer to their true values e.
Reveal information about expected prices and volatility C. Which of the following pieces of info is NOT conveyed by at least one type of derivative. The value of a derivative is tied to the value of an underlying security or asset.
4-year maturity corporate bond E. Advantages of Derivatives. Derivatives can be used for speculation and hedging.
All of the above. They are less volatile than spot markets. Mountaineer Inc has two divisions A and B that manufacture expensive bicycles.
Make spot prices stay closer to their true values E. CDerivatives allow the shifting of risk to those who can most efficiently bear it. Which of the following is NOT an advantage of derivative markets.
I am glad to help you in this question. An approximation of commodity prices is known through the spot prices of future contracts. Lower transaction costs than securities and commodities B.
Lower transaction costs fewer capital requirements etc. C They incur lower transaction costs than spot markets. Provide Access to Unavailable Market or Asset.
Which of the following are advantages of derivatives. Derivative markets are not by nature more or less volatile than spot markets. These advantages include lower transaction costs with reference to the value of underlying higher liquidity and ability to take short positions easily.
Advantages of Derivatives. A They are less volatile than spot markets. Reveal information about expected prices and volatility c.
Hedging or Mitigating Risk. When an investor invests in the derivative contracts in the open market it is considered that he is purchasing the right to perform it. -288 All of the following are benefits of derivatives markets EXCEPT.
Besides making profits there are various other advantages behind the use of derivative contracts. All of the above. Lower transaction costs than securities and commodities b.
The benefits of derivatives such as low transaction costs low capital investment requirements leverage use and ease of going short can also result in excessive speculative trading. Derivatives contracts helps in ascertaining the price of underlying assets. Pros of derivatives.
Since the value of the contract is intrinsically linked to the underlying asset price it can be used to insure against losses caused by unexpected price drops or. Student Response Correct Answer Feedback A. A few of them are as mentioned below.
Which of the following is not an advantage of derivative markets. The first main benefit of the existence of derivatives comes in the fact that they enable price discovery. Which of the following isare money market instruments.
Derivatives are used for a number of reasons including. The fact is that the derivatives encourage anyone thats focused on speculation hedging and arbitrage to increase the competition of the market. Which of the following are advantages of derivatives.
Most types of derivatives are suitable investments for unsophisticated investors. Reveal information about expected prices and volatility c. Lower transaction costs than securities and commodities b.
Therefore the correct answer is Letter A. In other words users of derivatives can hedge against fluctuations in exchange and interest rates equity and commodity prices as well as creditworthiness. As of 2010 which one of the following derivatives instruments had the greatest amount of notional principle outstanding.
Make spot prices stay closer to their true values e. The use of leverage is both an advantage and a disadvantage of derivatives. A transactions costs are usually smaller in derivatives markets than for similar trades in the underlying asset.
Transactions costs are usually smaller in derivatives markets than for similar trades in the underlying asset. Wonderful_life OFFLINE Platinum Boarder Posts. Help control risk D.
The most widely used strategy of the underlying. Exchange-traded derivatives usually offer which of the following advantages may be more than one correct answer compared to over-the-counter derivatives. There is a market for both the subassembly and the final product.
Appreciate a tutors answer Please. Criticism and misuse of derivatives.
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