The advantage of over-the-counter products such as swaps or forwards contracts,relative to exchange-traded products such as options or futures, is: * A. standardization B. regulation C. flexibility. D. all of the given answers

The advantage of over-the-counter products such as swaps or forwards contracts,relative to exchange-traded products such as options or futures, is: * A. standardization B. regulation C. flexibility. D. all of the given answers

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter8: Relationships Among Inflation, Interest Rates, And Exchange Rates

Section: Chapter Questions

Problem 8QA

See similar textbooks

Related questions

Q: Advantages of currency futures contracts relative to forward contracts include _ a. Higher…

A: A futures contract is a legal contract to purchase or sell an underlying asset or security at a…

Q: Explain the followings: a. Floating Exchange Rates b. Pegged or…

A: The price of a country's currency in reference to the currency of another country. When countries…

Q: Distinguish between (2) spot and futures markets

A: A financial market is the market where financial assets are created and traded. Financial assets are…

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: describe the major differences between futures and forwards. b)describe delivery and settlement…

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

Q: age of over-the-counter products such as swaps or forwards contracts, relative to exchange-traded…

A: Exchanged traded products are traded on stock exchanges where as over the counter products are…

Q: A foreign currency loan is a typical example for O a. Currency Risk O b. Interest rate risk…

A: A foreign currency loan is one in which you borrow money in a foreign currency, such as Swiss…

Q: idered the driving forces of the derivatives market? Rank them in order of importance and provide a…

A: Derivative market is one of the most necessary component of the stock market.

Q: How is credit risk managed in case of foreign exchange futures contracts? Discuss with the use of an…

A: Credit risk management in foreign exchange (forex) futures contracts is a crucial aspect of…

Q: Highlight the key difference between option, futures and forward contracts.

A: Option, futures and forwards are three examples of financial derivatives. Option gives traders the…

Q: Which is a key difference a manager should note in choosing between forward and futures contracts?…

A: a. Exchange trading occurs in the case of futures contracts. Therefore, futures contract are more…

Q: Which of the following is not an assumption of technical analysis? A.The security under analysis is…

A: Technical Analysis is used to find out trading opportunities by analyzing the past trends and…

Q: Define alternative trading system (ATS)

A: An alternative trading system (ATS) is not an exchange-regulated, yet a position that suits its…

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: What is an alternative trading system (ATS)?

A: Alternative trading systems are generally helpful for people like investors & professional…

Q: A futures contract is a contract in which a buyer and seller set a trading price for a future basis.…

A: Futures contract is a contract in which buyers and sellers fix a trade price for an underlying at a…

Q: Which of the following people represents several insurance companies but owns the policy…

A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Differentiate between the following types of markets: physical asset vs. financial markets, spot vs.…

A: Note : As per the guidelines, only first three parts will be answered.

Q: a) Define Forwards and Futures. b)Explain the differences between these instruments and how these…

A: STEP 1 Derivatives are a particular class of financial contract whose value is based on an…

Q: Which one of the following is true ? A, CFDs are over - the - counter instruments that can be used…

A: CFD stands for Contract for Difference. It is a financial instrument where the differences in the…

Q: What do we mean by covered interest arbitrage parity? Explain in detail by a diagram.

A: Covered interest arbitrage: It is relationship between forward premium and interest rates. If…

Q: The fact that the clearinghouse is the counterparty to every futures contract issued is important…

A: Risk is the uncertainty or potential loss in an investment decision.

Q: e different than Over the counter markets because on exchanges A. Futures contracts are…

A: Step 1 Via-the-Counter (OTC) trader is a trader market divided into areas where traders and…

Q: 1) Financial markets may be categorized as? A). debt securities markets B). Equity securities…

A: Financial markets refer to a place where the buying and selling between the financial institution…

Q: If the value of contractual transactions is affected by exchange rate fluctuations, most likely the…

A: Changes in currency exchange rates can have a detrimental influence on a company's operations and…

Q: 1. An investor has just obtained the following quotes for a European option on GE stock worth $31.…

A: Spot Price, S is $31 Call premium, C is $3 Put premium, P is $2.25 Strike Price, K is $30 The time…

Q: The price at which a market maker is prepared to buy a currency is termed as O a. Spot rate Ob. Ask…

A: Market maker is an institution or a person who holds the currency or stock for future trading. A…

Q: Which of the following is an exchange risk management technique through which the firm contracts…

A: The risk transfer is a kind of business agreement where a business or the one party agree with the…

Concept explainers

Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.

Question

The advantage of over-the-counter products such as swaps or forwards contracts,relative to exchange-traded products such as options or futures, is: *

A. standardization

B. regulation

C. flexibility.

D. all of the given answers

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1Basic Information

VIEW

Step 2 Solution

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

The advantage of over-the-counter products such as swaps or forwards contracts, relative to exchange-traded products such as options or futures, is: a. regulation. b. standardisation. c. flexibility. d. all of the given answers.
1) Financial markets may be categorized as? A). debt securities markets B). Equity securities markets C). Derivative securities markets D). Foreign exchange markets. Required : Please answer this question by choosing the correct option.
Which of the followings is not derivative instruments, Select one: Oa. Shares O b. Financial options O c. Forwards O d. Currency swaps
Define alternative trading system (ATS)
F3
Advantages of currency futures contracts relative to forward contracts include _ a. Higher liquidity b. Standardized contract specifications c. Freedom to sell the contract before maturity d. All of the above
a)describe the major differences between futures and forwards. b)describe delivery and settlement in derivative markets. c)describe financial engineering and hybrids. d)discuss the three presuppositions for a well-functioning financial market.
Distinguish between (2) spot and futures markets
What is an alternative trading system (ATS)?
a) Define Forwards and Futures. b)Explain the differences between these instruments and how these derivatives are used to mitigate risk. nb: answer question a and b
Which one of the following is true ? A, CFDs are over - the - counter instruments that can be used to gain exposure to equities,bonds, currencies,futures and options. B, CFDs are over - the - counter instruments that can be used to gain exposure to equities, bonds, currencies, indices and commodities. C, CFDs are exchange - traded instruments that can be used to gain exposure to equities, bonds,currencies,futures and options. D, CFDs are exchange - traded instruments that can be used to gain exposure to equities,bonds,currencies, indices and commodities. ?
Which is a key difference a manager should note in choosing between forward and futures contracts?a. Exchange trading makes forward contracts more liquid.b. Futures contracts carry standardized terms, while forward contracts can be tailored to meet specific needs.c. Futures contracts have greater default risk than forward contracts.d. Forward contracts require initial margin deposits and daily marking to market, while futures do not.