What are the economic benefits of derivatives? Provide at minimum there benefits. Explain each

Q: c) Does every loan, which consists of an initial outlay followed by a sequence of re- ceipts, have a…

A: A loan can be defined as the financial support received from the lender by the borrower. In…

Q: Explain term Buydown Loans with examples?

A: Buy down loan is a loan in which a buyer will get the loan for reduced interest rate at least during…

Q: Describe about different types of investment derivatives.

A: Derivatives: Derivatives are some financial instruments which are meant for managing risk and…

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: Explain accounting for derivatives.

A: Derivatives: Derivatives are some financial instruments which are meant for managing risk and…

Q: Describe the uses of and accounting for derivatives

A: Accounting for derivatives: It is a method of recording a derivative holding of a company’s balance…

Q: explain whether true or false : The interest rate parity does hold in realty

A: Interest rate parity is an releationship between spot exchange rate and the forward exchane rate…

Q: Define derivatives

A: In Finance there are derivative contracts that derive its value from the underlying asset. This…

Q: Explain what is meant by forward contracts and futures using examples. List the main advantages /…

A: An option offers the holder of it the right, and not the responsibility, to buy or to sell an asset…

Q: What is margin requirement (for futures)?

A: Solution:- A Margin Requirement is the share of marginable securities that an investor should pay…

Q: How are derivatives recorded?

A: Derivatives:   Derivatives are some financial instruments which are meant for managing risk and…

Q: What is a swap? Describe the mechanics of a fixed-rate swap and a floating-rateswap.

A: SwapsAn agreement amongst 2 counterparties i.e parties, a financial institution for the exchange of…

Q: One can use Black-Scholes model to price any financial derivatives. true or false

A: The Black-Scholes model was specifically designed to value European-style options on non-dividend…

Q: Is the “forward price” the same thing as the “value of the forward contract” Explain.

A: Derivative is defined as the contract, which are between the two or more parties, who has the value…

Q: What is a futures contract?

A: Derivatives: Derivatives are some financial instruments which are meant for managing risk and…

Q: What is the effect on interest of an interest rate swap?

A: Derivatives: Derivatives are some financial instruments which are meant for managing risk and…

Q: Please draw the Capital Market Line and the Security Market Line. Please write down their function…

A: CAPITAL MARKET LINE V/S SECURITY MARKET LINE…