Equities and F&O Segments Quiz

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What type of risks can market participants face in derivatives trading?

Market risk and operational risk

Credit risk and legal risk

Price risk and liquidity risk (correct)

Regulatory risk and systemic risk

Why do hedgers want to give away risk in the derivatives market?

To reduce market volatility

To gain speculative profits

To increase their leverage

To transfer risk to participants with a high risk appetite (correct)

What is the primary benefit of organized markets for derivatives trading?

Reduced liquidity

Higher leverage opportunities

Risk management mechanism and surveillance (correct)

Increased speculation

Which document should market participants carefully read when trading derivatives?

Model Risk Disclosure Document Signup and view all the answers

Why should individuals with limited resources be cautious when trading derivatives?

Derivatives may not be suitable for them due to leverage and risks Signup and view all the answers

What role does the broker play in derivatives trading?

Providing Model Risk Disclosure Document to clients Signup and view all the answers

What distinguishes organized markets from unorganized markets in the context of derivatives?

"Shift of speculative trades" and surveillance in organized markets Signup and view all the answers

Which type of risk arises from the inability to exit a position in derivatives trading?

"Liquidity risk" Signup and view all the answers

"Counterparty risk" in derivatives trading refers to the risk of:

"Default by counterparty" Signup and view all the answers

"Operational risk" for market participants in derivatives includes:

"Inadequate documentation and fraud" Signup and view all the answers

Equities and F&O Segments Quiz

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Questions and Answers

What type of risks can market participants face in derivatives trading?

Why do hedgers want to give away risk in the derivatives market?

What is the primary benefit of organized markets for derivatives trading?

Which document should market participants carefully read when trading derivatives?

Why should individuals with limited resources be cautious when trading derivatives?

What role does the broker play in derivatives trading?

What distinguishes organized markets from unorganized markets in the context of derivatives?

Which type of risk arises from the inability to exit a position in derivatives trading?

"Counterparty risk" in derivatives trading refers to the risk of:

"Operational risk" for market participants in derivatives includes:

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