Question
a.
Large returns in adverse situations.
b.
Losses due to borrowing or leverage.
c.
Minimal impact on underlying asset prices.
d.
Reduction of potential profits.
Posted under IC 89 Management Accounting
Interact with the Community - Share Your Thoughts
Uncertain About the Answer? Seek Clarification Here.
Understand the Explanation? Include it Here.
Q. What is the adverse effect regarding the use of derivatives?
Similar Questions
Explore Relevant Multiple Choice Questions (MCQs)
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
Q. What is the primary characteristic of privately negotiated customised and OTC-traded financial derivatives?
View solution
Q. According to The Economist magazine, what was the approximate size of the over-the-counter (OTC) derivatives market as of June 2011?
View solution
Q. What is the criticism regarding the size of the derivative market based on "notional" values?
View solution
Q. According to the Bank of International Settlements, what percentage of the total notional amount of OTC derivatives are interest rate related contracts?
View solution
Q. What is the primary characteristic of a forward contract regarding the exchange of money?
View solution
Q. What is a characteristic feature of forward contracts in terms of customization?
View solution
Q. How are forward contracts generally settled?
View solution
Q. What is a notable characteristic of the size and variety of forward contracts compared to other derivatives like Futures?
View solution
Q. What is the risk associated with counterparties in forward contracts due to the absence of secondary markets?
View solution
Q. What is the primary characteristic of a futures contract?
View solution
Q. How does a buyer of a futures contract differ from a seller of a futures contract?
View solution
Q. How does a futures contract differ from a forward contract?
View solution
Q. What is "Marking to Market" in the context of futures contracts?
View solution
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!
