Referring to the standards that mention in the table below, compare between options and futures contracts.      Area Options Contract Futures Contract 1 Profile of Obligations     2 Price of Contract     3 Kinds of contract     4 Asset Underlying     5 Implement Contract

Q: Give a detailed account of the roles of the two (2) main participants in the futures markets.…

A: Futures markets: The futures markets are a market place where contracts to purchase and sell…

Q: Describe each of the following derivative instruments and suggest a specific risky situation that…

A: All of these derivatives instruments defined below.

Q: Describe the basis of Futures contracts and discuss the potential risks and rewards.

A: An agreement where there are two parties, say one is a buyer and another one is a seller decides to…

Q: Which of the following are TRUE regarding the differences between futures and forward contracts?…

A: Futures contracts are contractual agreements between a buyer & a seller to buy or sell an…

Q: Critically explain with examples the concept of futures and the differences between options and…

A: Futures in a type of derivative product in which there is a contract that is agreed in between two…

Q: Explain why the price of an expiring futures contract must be approximately equal to the spot price…

A: The spot price is the current market price at which a particular asset, such as security, commodity,…

Q: What is a FUTURES CONTRACT and what are its key components

A: Derivatives are those securities, the value of which depends on another security. There are few…

Q: In the derivative markets a swap is: *       A. another name for a call option.       B. another…

A: The swap refers to the exchange. In the financial derivatives market, swaps are used for…

Q: Thoroughly describe the concept of hedging, focusing on the FX markets. In addition to the economic…

A: Foreign exchange market is defined as the globally decentralized or an over the counter market…

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: Briefly explain the pay-off structure of futures and options contract. Also make it more clear with…

A: Futures are the derivative contract where you get the rights as well as the obligations. For example…

Q: The market that deals in futures and options is called O a Over-the-counter market Ob. Derivatives…

A: Financial markets are the markets that play the role of intermediaries between the buyers and…

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: (2) A long position in a put option with an exercise price of $50 and a front-end pre- mium expense…

A: A.2) For Long Put option  Pay off = Max of ({Strike Price - Share price}, 0) Net Profit = Pay off -…

Q: Complete a percentage change income statement and a percentage change balance sheet

A: Profit and loss statements and Balance sheets both are the most important financial statements of a…

Q: MCQ: The type of option that gives the right to buyer to sell the underlying option at spe price is…

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

Q: Financial

A: Financial derivatives can be defined as contracts where the value is taken from the underlying…

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: Question 6 6.) The instrument in figure 2 exchanges cash flows with different .characteristics O a)…

A: Figure 2 is an example of Volatility Swap.

Q: .How can options, futures, and forward contracts be used to devise simple hedging strategies?…

A: Options, futures and forwards are derivative contracts that can be used to hedge the underlying…

Q: What are the pros and cons of using options traded in the over-the-counter market and in an exchange…

A: Options can be defined as those contracts which allow an investor to purchase or sell a security on…

Q: Related to a futures contract, what is the maintenance margin?   Question 14 options:…

A: A future contract is a contract agreed by buyer or seller of an asset to process purchase or sell of…

Q: Discuss the advantages and disadvantages of using options to hedge as compared to using futures…

A: Introduction: The future is the financial instrument of the derivative market in which a buyer and…

Q: What is the process that makes sure the market price of an underlying asset equals the price of a…

A: Futures contract is a derivative instrument in which the price of the underlying asset in fixed for…

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: In the context of options, what is the "premium"? A) The cost of entering into the option contract…

A: Call and put options are financial derivatives that provide the holder the right, but not the…

Q: The market price paid for an option is best defined as: a. The strike price of the option b. The…

A: Options are of two types Call and put

Q: define the four major types of derivatives and discuss their uses.   b) discuss the historical and…

A: A derivative is a financial contract whose value is derived from the underlying asset, which could…

Q: The most popular type of derivative securities is options. Discuss what is an option? Define calls…

A: Option is a type of derivative instrument which gives a right, not the obligation to the holder to…

Q: Process A has a fixed cost of $16,000 per year and a variable cost of $40 per unit. For process B, 5…

A: We have been given that ,  For process A   Fixed costs = $16,000 variable costs = $40 / unit   For…

Q: which one is correct please confirm? Q5: Parties who have sold a futures contract and thereby…

A: Whenever a vendor sells safety first with the purpose of buying back it or shielding it later at a…

Q: What is an interest-rate futures contract? How does it differ from an interest-rate forward…

A: Since you have posted multiple independent questions, according to the guidelines, only the first…

Q: What are the main differences between forward contracts and futures contracts. b) What is meant by…

A: Since you have asked multiple questions, we will solve the first question for you. Please ask…

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: Which of the following trade in OTC market? 1. i. 1. ". Forward contract An option A Swap An exotic…

A: An over-the-counter (OTC) market is a decentralised market in which market participants transact…

Q: Financial derivatives include

A: The term derivative can be defined as an agreement between the two contracting parties & the…

Q: Explain what is meant by “initial margin” on a futures contract

A: A futures contract is a type of common financial agreement that specifies a future date and price at…

Q: Define the terms, or give short explanations.             -naked short sale -notional amount…

A: A derivative is a financial contract whose value is derived from the underlying asset, which could…

Q: 37-Which one of the following derivatives is flexible and tailored to specific requirements of the…

A: The question is multiple choice question. Required  Choose the Correct Option.

Q: Call option contains the right to ____ a futures contract

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

Q: ontains the right to ____ a futures contr

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

Q: Value of a putable bond is A. O value of callable bond -option cost B.O value of nonputable bond +…

A: Options are a derivative instrument which gives the investor the right but not the obligation to buy…

Q: a) Futures contracts and options on futures contracts can be used to modify risk.Required:Identify…

A: Future contracts:  The future contracts are legal derivative contracts to buy or sell an underlying…

Q: All of the following are credit derivatives except: Group of answer choices C. Spread options D.…

A: Following are credit derivatives -

Q: Define each of the following terms: c. Financial futures; forward contract

A: Financial futures can also be called as futures helps in trading of non physical assets either for…