Define speculation in derivatives

Q: Describe about different types of investment derivatives.

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

Q: What is an equivalent process of a money market hedge? Why?

A: Money market hedge A technique of utilizing the money market that has high liquidity, as well as…

Q: Discuss the factors giving rise to an inverted futures market for a storable versus a non-storable…

A: The inverted futures market for storable goods exists when the short-term deal costs are more…

Q: Distinguish between margins in the securities markets and margins in the futures markets.

A:

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: What is an interest rate swap?

A: Swap is a derivative instrument where two parties agree to exchange payment responsibility on two…

Q: With example, differentiate between a physical settlement and a cash settlement in the derivatives…

A: A derivative market is a financial market in which financial derivatives such as futures contracts,…

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: How do transaction costs affect the ability of forward and futures markets to arbitrage profits?

A: Both future and the forward contract involve the execution of the transaction at a future date at a…

Q: Illustrate Derivatives?

A: Answer: A derivative is described as an investing technique defined to help the financial expert…

Q: Some financial instruments are called derivatives. Why?

A:

Q: Define derivatives

A: In Finance there are derivative contracts that derive its value from the underlying asset. This…

Q: Discuss the use of derivatives and its implications to investors

A: Derivatives: Derivatives are those financial instruments which derive their value from an underlying…

Q: What is the key difference between futures contracts and options?

A: Both futures contracts and options are derivative instruments. Their value depends on the value of…

Q: How are derivatives recorded?

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

Q: What are the implications of interest rate parity theorem.

A: Interest rate Parity:- The interest rate parity (IRP) theory states that the difference between the…

Q: Explain Extended Method for Interest Rate Swap Accounting.

A: Introduction Interest Rate Swap, an important type of derivatives, is the contract between 2 parties…

Q: What is the effect on interest of an interest rate swap?

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

Q: Explain why a futures contract can be used for either hedging or speculation.

A: Hedging and speculation are the strategies which are used by investors while trading. Hedging is…

Q: Define Interest rate swaps.

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

Q: Changes in what price lead to gains and/or losses in futures contracts?

A: changes in underlying asset leads to gains and/or losses in future contracts.

Q: Explain how the futures markets can be used to reduce interest rate and input price risk.

A: A contract in which a seller & a buyer has an obligation to sell or buy an asset for a…

Q: Forwards and Futures: How are forwards and futures similar? How are they different? Briefly explain…

A: A forward contract is referred to the customized contract, which is between the two parties for…

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: Is Bitcoin considered as a financial derivative?

A: Finance is the source for business and is required for the flow of money for any operations.

Q: Describe Derivatives Used to Hedge Risk.

A: Definition:   Derivatives: The contract whose value derives from the fluctuation of values of the…

Q: Define speculative balances

A: Speculation in simple terms can be associated with gambling. speculation is done on basis of guess…

Q: Describe Disclosure of Derivatives and Risk.

A: As per FAS 161- Please see below : Disclosures to be made in the footnotes for derivatives- 1. An…

Q: What’s the difference between spot markets and futures markets?

A: Introduction: Spot market can be defined as a over the counter market which involves trading of…

Q: What are the economic benefits of derivatives? Provide at minimum there benefits. Explain each

A: Derivatives are financial instruments or contracts between 2 or more parties which derive their…

Risk Management Techniques

Risk management is the procedure of recognizing, analyzing, monitoring, and preventing the risks and threatening factors of investments and business. Risks can arise from various factors including internal controls, market changes, natural disasters, and failure in productions. Risk management techniques enable entities to control and minimize the risks as well as the threatening factors of the business and it also helps to improve the business.