Question

What is a basic feature of derivatives?

a.

It remains unaffected by changes in the underlying price or index.

b.

Its value changes in response to changes in the underlying price or index.

c.

It requires a significant initial investment.

d.

Settlement is always done immediately.

Posted under IC 89 Management Accounting

Answer: (b).Its value changes in response to changes in the underlying price or index. Explanation:A key feature of derivatives is that their value changes in response to changes in the underlying price or index.

Interact with the Community - Share Your Thoughts

Uncertain About the Answer? Seek Clarification Here.

Understand the Explanation? Include it Here.

Q. What is a basic feature of derivatives?
Add Comment

Similar Questions

Explore Relevant Multiple Choice Questions (MCQs)

Q. What is the usual characteristic of the notional face value in derivatives?

View solution

Q. What is an Embedded Derivative?

View solution

Q. What is the purpose of a Commodity Derivative?

View solution

Q. What characterizes Over the Counter (OTC) Derivatives?

View solution

Q. What are Exchange-Traded Derivatives?

View solution

Q. How are prices typically handled in Exchange-Traded Derivatives?

View solution

Q. How do speculators use derivatives?

View solution

Q. What happened in 1995 that brought notoriety to speculative trading in derivatives?

View solution

Q. How do investors use derivatives for risk management?

View solution

Q. What is one purpose of providing leverage in derivatives trading?

View solution

Q. In what situation do investors use derivatives for speculation?

View solution

Q. Why might a business firm use derivatives?

View solution

Q. What is the adverse effect regarding the use of derivatives?

View solution

Q. What are the two classes of derivative contracts?

View solution

Q. What is one of the oldest derivatives with a history tracing back to the eighteenth century?

View solution

Q. How are derivatives categorised based on their pay-off profile?

View solution

Q. What is the primary distinction between "Lock" and "Option" products?

View solution

Q. How are derivatives commonly used for risk management?

View solution

Q. In finance, where are Forward contracts, Swap, and different types of options regularly traded?

View solution

Q. What is the typical involvement of taking or making delivery of underlying assets in derivative transactions?

View solution
View All MCQs on IC 89 Management Accounting

Recommended Subjects

Are you eager to expand your knowledge beyond IC 89 Management Accounting? We've handpicked a range of related categories that you might find intriguing.

Click on the categories below to discover a wealth of MCQs and enrich your understanding of various subjects. Happy exploring!

Civil Engineering

Dive into the world of Civil Engineering with our specialized category. Explore the...

Drug and Pharmaceutical Biotechnology

Navigate the world of pharmaceuticals and biotechnology with our dedicated category....

Biochemistry

Delve into the intricate world of Biochemistry with our Biochemistry category....

Cost Accounting

Dive into the realm of Cost Accounting with our specialized category. Explore cost...

Enzyme Technology

Unlock the power of enzymes with our Enzyme Technology category. Explore enzyme...

Highway Engineering

Navigate the road to efficient transportation with our Highway Engineering category....

General Knowledge

Expand your horizons and stay informed about the world with our General Knowledge...

Biology

Dive into the realm of life sciences with our Biology category. Explore the wonders...

Environmental Engineering

Explore the critical field of Environmental Engineering with our dedicated category....