Question

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

a.

It is always involved to settle transactions.

b.

It is mostly involved in derivative transactions.

c.

It is never involved; transactions are mostly settled by offsetting positions in derivatives themselves.

d.

It depends on the type of derivative instrument.

Answer: (c).It is never involved; transactions are mostly settled by offsetting positions in derivatives themselves. Explanation:Usually in derivative transactions, the taking or making of delivery of underlying assets is not involved; the transactions are mostly settled by offsetting positions in derivatives themselves.

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

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