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

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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.

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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.

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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.

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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.

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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.