Podcast
Questions and Answers
Which type of derivative is designed for the purpose of exchanging cash flows based on a specified underlying asset at a specified future date?
Which type of derivative is designed for the purpose of exchanging cash flows based on a specified underlying asset at a specified future date?
- Futures
- Options
- Swaps (correct)
- Equity Shares
In the context of derivatives, why are they often considered a 'Zero Sum Game'?
In the context of derivatives, why are they often considered a 'Zero Sum Game'?
- Because derivative trades do not involve any risks for the parties participating.
- Because derivatives are not influenced by market conditions and always yield positive returns.
- Because the gains of one party in a derivative trade exactly offset the losses of the other party. (correct)
- Because derivative transactions always result in profits for all parties involved.
Which type of derivative provides the holder with the right, but not the obligation, to buy or sell an underlying asset at a specified price before or at a specified date?
Which type of derivative provides the holder with the right, but not the obligation, to buy or sell an underlying asset at a specified price before or at a specified date?
- Equity Shares
- Swaps
- Options (correct)
- Futures
What is the major difference between Futures and Forwards contracts?
What is the major difference between Futures and Forwards contracts?
In derivatives trading, what does it mean when a contract is referred to as a 'Zero Sum Game'?
In derivatives trading, what does it mean when a contract is referred to as a 'Zero Sum Game'?
Why do derivatives play a significant role in hedging risk?
Why do derivatives play a significant role in hedging risk?
What is a key difference between forwards and futures contracts?
What is a key difference between forwards and futures contracts?
Why do hedgers use derivatives in the market?
Why do hedgers use derivatives in the market?
What makes derivatives a zero-sum game in the financial market?
What makes derivatives a zero-sum game in the financial market?
Which statement correctly describes the nature of forward contracts?
Which statement correctly describes the nature of forward contracts?
