What is a derivative and what is its purpose? Give an example of how a firm might use a derivative product to reduce risk in its business. Why do users of derivatives need to be careful?
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What is a derivative and what is its purpose?
Give an example of how a firm might use a derivative product to reduce risk in its business.
Why do users of derivatives need to be careful?
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- how a firm might use a commodity derivative to reduce risk in its business? please include a detailed explanations with examplesWhat is a derivative and what is its purpose? Give an example of how a firm might use a derivative product to reduce risk in its business in New Zealand. Why do users of derivatives need to be careful?how did silicion valley bank used derivative product to reduce risk in its business.
- What are derivatives? How can derivatives be used to reduce risk? Can derivatives be used to increase risk? Explain thoroughly.what is the difference between '' going long '' and '' going short''? is going short allowed in all derivative markets?What are advantages and disadvantages of using derivatives? Discuss. Provide examples. Explain how leverage is built into derivatives. Provide examples.
- What are derivative instruments? Give examples of derivatives and briefly describe them. What are the various ways that companies use derivative instruments? What do companies hope to gain by using derivatives?If you have long position in one asset and you want to hedge the risk of price drop in that asset while still having the upside in case the asset price goes up, what sort of derivative trading will you do? Explain in brief with payoff diagram.describe the process of short selling. define the theoretical fair value of an asset and relate it to the concept of market efficiency. discuss and relate the concepts of arbitrage and the law of one price. describe how and why risk is transferred from hedgers to speculators in derivative markets.
- What type of security can be used to minimize both price risk and reinvestment riskfor an investor with a fixed investment horizon? Does this security protect the realpayoff? Explain.A derivative is a financial instrument whose value is derived from the underlying asset. It’s an agreement that has theability to move risk from one party to another. With this in mind, discuss the advantages associated with use of Derivativesas a financial instrument.What is a Financial Derivative? What is the role of Derivatives in managing Financial Risk? Give an example.