Financial instrument : A financial instrument can be cash, or a share of ownership (stock investments), or a contractual obligation to deliver (accounts payable) or receive cash ( accounts receivable ), or a contractual obligation to exchange financial instruments (like stock options). To explain : The reason for financial instruments being called as derivatives

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter A, Problem A.1Q

To determine

Financial instrument: A financial instrument can be cash, or a share of ownership (stock investments), or a contractual obligation to deliver (accounts payable) or receive cash (accounts receivable), or a contractual obligation to exchange financial instruments (like stock options).

To explain: The reason for financial instruments being called as derivatives

Expert Solution & Answer

Explanation of Solution

Some financial instruments are meant for managing risk in the financial markets. These financial instruments exist to safeguard against the risk created by other financial instruments. Some examples of such financial instruments are forward contracts, interest rate swaps, futures, and options. These financial instruments derive the values from the future value of underlying security or index. Hence, some financial instruments are called as derivatives.

Conclusion

Since some financial instruments derive the values from the future value of underlying security or index, they are called as derivatives.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Question 4

Questin 5

Belle Garments manufactures customized T-shirts for football teams. The business uses a perpetual inventory system and has a highly labour-intensive production process, so it assigns manufacturing overhead based on direct labour cost. The business operates at a profit margin of 33% on sales. Belle Garments expects to incur $2,205,000 of manufacturing overhead costs and estimated direct labour costs of $3,150,000 during 2025. At the end of December 2024, Belle Line Garments reported work in process inventory of $93,980 - Job FBT 101 - $51,000 & Job FBT 102 - $42,980 The following events occurred during January 2025. i) Purchased materials on account, $388,000. The purchase attracted freight charges of $4,000 ii) Incurred manufacturing wages of $400,000 iii) Requisitioned direct materials and used direct labour in manufacturing. Job # FBT 101 FBT 102 FBT 103 FBT 104 Direct Materials $70,220 97,500 105,300 117,000 iv) Issued indirect materials to production, $30,000. Direct Labour $61,200…

Answer 2

Question

Chapter A, Problem A.1Q

To determine

Financial instrument: A financial instrument can be cash, or a share of ownership (stock investments), or a contractual obligation to deliver (accounts payable) or receive cash (accounts receivable), or a contractual obligation to exchange financial instruments (like stock options).

To explain: The reason for financial instruments being called as derivatives

Expert Solution & Answer

Explanation of Solution

Some financial instruments are meant for managing risk in the financial markets. These financial instruments exist to safeguard against the risk created by other financial instruments. Some examples of such financial instruments are forward contracts, interest rate swaps, futures, and options. These financial instruments derive the values from the future value of underlying security or index. Hence, some financial instruments are called as derivatives.

Conclusion

Since some financial instruments derive the values from the future value of underlying security or index, they are called as derivatives.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter A, Problem A.1Q

To determine

Financial instrument: A financial instrument can be cash, or a share of ownership (stock investments), or a contractual obligation to deliver (accounts payable) or receive cash (accounts receivable), or a contractual obligation to exchange financial instruments (like stock options).

To explain: The reason for financial instruments being called as derivatives

Expert Solution & Answer

Explanation of Solution

Some financial instruments are meant for managing risk in the financial markets. These financial instruments exist to safeguard against the risk created by other financial instruments. Some examples of such financial instruments are forward contracts, interest rate swaps, futures, and options. These financial instruments derive the values from the future value of underlying security or index. Hence, some financial instruments are called as derivatives.

Conclusion

Since some financial instruments derive the values from the future value of underlying security or index, they are called as derivatives.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter A, Problem A.1Q

To determine

Financial instrument: A financial instrument can be cash, or a share of ownership (stock investments), or a contractual obligation to deliver (accounts payable) or receive cash (accounts receivable), or a contractual obligation to exchange financial instruments (like stock options).

To explain: The reason for financial instruments being called as derivatives

Expert Solution & Answer

Explanation of Solution

Some financial instruments are meant for managing risk in the financial markets. These financial instruments exist to safeguard against the risk created by other financial instruments. Some examples of such financial instruments are forward contracts, interest rate swaps, futures, and options. These financial instruments derive the values from the future value of underlying security or index. Hence, some financial instruments are called as derivatives.

Conclusion

Since some financial instruments derive the values from the future value of underlying security or index, they are called as derivatives.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter A, Problem A.1Q

To determine

Financial instrument: A financial instrument can be cash, or a share of ownership (stock investments), or a contractual obligation to deliver (accounts payable) or receive cash (accounts receivable), or a contractual obligation to exchange financial instruments (like stock options).

To explain: The reason for financial instruments being called as derivatives

Expert Solution & Answer

Explanation of Solution

Some financial instruments are meant for managing risk in the financial markets. These financial instruments exist to safeguard against the risk created by other financial instruments. Some examples of such financial instruments are forward contracts, interest rate swaps, futures, and options. These financial instruments derive the values from the future value of underlying security or index. Hence, some financial instruments are called as derivatives.

Conclusion

Since some financial instruments derive the values from the future value of underlying security or index, they are called as derivatives.

Answer 6

Chapter A, Problem A.1Q

To determine

Financial instrument: A financial instrument can be cash, or a share of ownership (stock investments), or a contractual obligation to deliver (accounts payable) or receive cash (accounts receivable), or a contractual obligation to exchange financial instruments (like stock options).

To explain: The reason for financial instruments being called as derivatives

Expert Solution & Answer

Explanation of Solution

Some financial instruments are meant for managing risk in the financial markets. These financial instruments exist to safeguard against the risk created by other financial instruments. Some examples of such financial instruments are forward contracts, interest rate swaps, futures, and options. These financial instruments derive the values from the future value of underlying security or index. Hence, some financial instruments are called as derivatives.

Conclusion

Since some financial instruments derive the values from the future value of underlying security or index, they are called as derivatives.

Answer 7

Chapter A, Problem A.1Q

To determine

Financial instrument: A financial instrument can be cash, or a share of ownership (stock investments), or a contractual obligation to deliver (accounts payable) or receive cash (accounts receivable), or a contractual obligation to exchange financial instruments (like stock options).

To explain: The reason for financial instruments being called as derivatives

Answer 8

Expert Solution & Answer

Explanation of Solution

Some financial instruments are meant for managing risk in the financial markets. These financial instruments exist to safeguard against the risk created by other financial instruments. Some examples of such financial instruments are forward contracts, interest rate swaps, futures, and options. These financial instruments derive the values from the future value of underlying security or index. Hence, some financial instruments are called as derivatives.