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Questions and Answers
What type of risks can market participants face in derivatives trading?
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?
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?
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?
Which document should market participants carefully read when trading derivatives?
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Why should individuals with limited resources be cautious when trading derivatives?
Why should individuals with limited resources be cautious when trading derivatives?
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What role does the broker play in derivatives trading?
What role does the broker play in derivatives trading?
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What distinguishes organized markets from unorganized markets in the context of derivatives?
What distinguishes organized markets from unorganized markets in the context of derivatives?
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Which type of risk arises from the inability to exit a position in derivatives trading?
Which type of risk arises from the inability to exit a position in derivatives trading?
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"Counterparty risk" in derivatives trading refers to the risk of:
"Counterparty risk" in derivatives trading refers to the risk of:
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"Operational risk" for market participants in derivatives includes:
"Operational risk" for market participants in derivatives includes:
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