A seller of a futures contract can choose not to deliver the underlying asset. True O False

Q: Why might individuals purchase futures contracts rather than the underlying asset? What is the…

A: The concept of future contact is associated with management of risk or uncertainty of business…

Q: A call option holder has an obligation to sell the asset. True or false?

A: A call option is an instrument which provides its holder an option to buy an underlying asset on a…

Q: one key difference between option contracts aND FUTURE CONTRACTS IS THAT IN AN OPTION CONTRACT, THE…

A: Option Contract-An options contract is a contract between two parties to facilitate a potential…

Q: 2. What is the major difference in the obligation of one with a long position in a futures (or…

A: The main difference between a futures (or forward) contract and an options contract is that a buyer…

Q: Which of the following is True? a. Call option and Put option are identical derivatives contracts…

A: If the buyer of a short call option exercises the right to buy the underlying asset from the seller…

Q: One of the differences between a forwardand a futures  contract is  forward contracts are…

A: Forward Contract is a customized contract between two parties to buy or sell a asset at a particular…

Q: Compare and contrast the commitments taken on by the following:   A futures contract seller versus a…

A: A futures contract seller is a party who has agreed to sell a particular asset at a particular…

Q: Which type of financial derivative gives the holder the right t predetermined expiration date? )…

A: Options: An option is a contract that gives the holder the right but not the obligation to buy or…

Q: If the underling is a liability rather than an asset, then the option premium should become…

A: The main objective of the derivative market is to secure the investment portfolio against price…

Q: Which of the following is NOT true O a. Futures contracts nearly always last longer than forward…

A: The following is not true:Answer: Futures contracts nearly always last longer than forward…

Q: Hedgers can enter into an insurance policy, also known as a financia contract, also known as a…

A: There are mainly three types of derivative contracts. They are – futures, options and swaps.

Q: The seller of a put option is not necessarily the seller of the underlying asset. True False

A: The options can be sold even though the underlying assets are not held by the option sellers.

Q: The buyer of a Put Option has the right but not the obligation to sell the underlying stock. True…

A: A put option is a derivative contract giving the purchaser/owner the right, but not the obligation,…

Q: detail two procedures which the seller of a futures contract can use to lock in a gain at some time…

A: A futures contract is a legally binding agreement to acquire or sell a certain commodity, asset, or…

Q: hy might an individual purchase futures contracts, rather than the underlying assets? Please…

A: Future contracts are derivative contracts that means they derive value from the underlying assets…

Q: By acting as the counterparty to every futures position, the exchange eliminates the A) market B)…

A: The correct answer to the question is "B) credit".Credit risk is the risk that there will be a…

Q: A "cash and carry" transaction

A: Arbitrage is the strategy utilized by the investors, in which they make benefit of the asset…

Q: In Swap contract one counter party has an obligation but not right, while in an option contract the…

A: Swap is a contract between two parties to exchange cash flows of a contract to each other. The leg…

Q: Can you please help with the question in the picture attached? The answer should be only one and I’m…

A: The correct answers are:B. At the point of buying a futures contract the buyer does not know the…

Q: The major difference between futures and options arises from the different obligations of buyers…

A: In futures contract, both the buyer and seller of the contract are obligated to buy and sell the…

Q: Which type of financial derivative is used to protect against adverse price movements in an asset?…

A: Financial derivatives are instruments whose value derives from the underlying assets or securities,…

Q: One difference between futures contracts and forward contracts is that futures contracts are…

A: In forward and futures contracts, two parties agree to acquire or sell a specified asset at a…

Q: Futures contracts offer more flexible terms than a forward contract. True False

A: Futures and Forward contracts are contracts which allows to buy or sell an underlying asset at a…

Q: 6. Which one of the following statements is incorrect regarding the margining of exchange-trade…

A: The future contract is a type of exchange traded contract which is standardised in nature and which…

Q: Which is true about Futures contracts? a. is not traded on an organized exchange and is customized…

A: A futures contract is an agreement between two parties to acquire or sell an item at a specific time…

Q: For a call option, the: *       A. buyer is locked into receive the underlying asset at a specified…

A: Call option is a type of contract in which buyer has right or option to purchase specified asset or…

Q: If the underling is a liability rather than an asset, then the strike price of the option should be…

A: The option is a financial security since a buyer can purchase the right rather than the obligation…

Q: A hedger locks in a price with the final outcome of that hedge determined by the final basis. A.…

A: A hedger is a person who fixed his final outcome using the future and forward prices. The basis is…

Q: Which of the following describes a short put option? The obligation to sell an asset for a certain…

A: The put option give the right to the holder to sell the Asset by certain by certain date certain…

Q: Fundamental security underlying the valuation need to be priced correctly for the derivative…

A: Introduction : Derivatives refers to the contractual financial obligations the value of which is…

Q: Futures contracts traded on an organized exchange. traded on an organized exchange, and forward…

A: Derivative is a contract made between two parties which derives its value from an underlying asset.…

Q: A derivative security derives its value from another previously issued instrument (a stock or bond).…

A: Derivatives can be used to for hedging or arbitrage purpose.

Q: The value of a derivative does not depend on the value of its underlying asset. True or False

A: False.The value of a derivative is directly influenced by the value and behavior of its underlying…

Q: A futures contract a. is not traded on an organized exchange and is customized to meet the needs…

A: Solution: A future contract is a standardize contract that trades on stock exchanges, these…